Singapore Business Review

RICHARD BRANSON:OuR gAlACtIC ADveNtuRe

why are asia’s corporates

gearing up now ?

cozycot’s nicole yee on her new ‘mook’

is social media failing to deliver?

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asian hedge funds swimming against the tide

Just how big is the offshore rmbmarket anyway?

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dog fight at changi : sia’s two-front battle

Singapore Business Review_Sigapore.pdf 5/2/11 2:49:49 PM

Tim Charlton

Here at Singapore Business Review global headquarters, we have been busy working the cocktail circuits to get out of our plush and spacious Stanley Street office and out onto the battle field of business. The results of those forays into Singapore’s business social scene can now be seen on our website at sbr.com.sg where we post photos of the best parties of the week and also in the pages of this magazine. This is also our way of telling you that er... um... if you are holding a party, we do make for good

and interesting guests, so drop us an email with an invitation and get yourself covered.

So why are we, as a magazine publisher, doing this? It is all part of our social network program, to extend beyond print and into the face-to-face, hand-to- clammy hand business of making contacts and building bridges.

We are also holding a number of highly impactful one day conferences, the first of which we just held for leaders in Healthcare. These are relatively small but high-level events for leaders in business to meet and discuss the most interesting and urgent topics affecting their businesses. We will then amplify the dialogue from those events by writing articles which we will then print on the pages of this magazine and post on our website. We will even act like twits and get them tweeted. After all this is the social age we live in.

More information on the events can be found on the website and in future issues of this magazine, and we look forward to seeing you there or at one of your parties. Social media is a good start for companies, but there is nothing like getting out of the office, away from the computer and meeting some real live people.

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SINGAPORE BUSINESS REVIEW | JULY 2011 3

CONteNtS

GoinG Dutch in the race to leaD the new anD Global bio-economy

FIRSTDoG FiGht at chanGi12

36

42

FEATURE

OPINION

SPECIAL FEATURE

FIRST

REPORT

REGULAR

Published Bi-monthly on the Second week of the Month by Charlton Media Group Pte Ltd, 15b Stanley Street,Singapore - 068734

For the latest business news from Singapore visit the website

www.sbr.com.sg

it haS been more miSSeS than hitS For weStern FooD retailerS in aSia

36 It has been more misses than hits for western food retailers in Asia Western domination of Asian grocery is by no means guaranteed, reports Krisana Gallezo

32 Ceaseless Education Postgraduate programs in a wage war against mediocrity

38 Future Secured Rewriting Singaporeans’ outlook for financing Insurance

41 Uniquely Singapore Banking on the tourism industry boom

42 Going Dutch in the race to lead the new and global Bio-economy

26 Our galactic adventure

27 Singapore Airlines versus Tiger Beer – why brands are admired or not in Singapore

30 Don’t be a twitter twit

44 Tricks of the ‘commercial jungle’

12 Dog fight at Changi

14 After a decade, Asia’s corporates gear up

16 Asian hedge funds swimming against the tide

18 Mainland tourists: easy come, easy go?

20 Offshore RMB market takes off in Hong Kong as Singapore poised in pursuit

22 Social media still struggle to pay dividends for companies

24 Cozycot’s new mook

28 Numbers

48 Life and Style

50 Last Word

Andrew Smart heads to the Nether lands to get the inside on the Bio- economy

4-342 SCM238_11_Sg Business 4C.ai 1 20/04/2011 8:22 PM

6 SINGAPORE BUSINESS REVIEW | JULY 2011

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News from sbr.com.sg

Daily news from Singapore

MOSt ReAD

Take a sneak peek inside SG’s most expensive apart-ment everWould you pay $17 mil-lion for this 3,000 sq ft condo?

SC Global Develop-ments’ “The Marq” on Paterson Hill might have set a new record price for non-landed homes at $5,842 psf from the previous $5,600 psf four years ago has the market talking.

“The Marq”, which snatched the title “the priciest apartment” from Orchard Turn Develop-ments’ Orchard Resi-dences, as the Business Times reported, was first launched in 2007.

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Some M1 Custom-ers still ranting over service dis-ruption todayA major mobile service outage affected some M1 users, but full restoration was already made, according to M1.

“There should have been no problem already, mobile services were fully restored,” Petrina Teoh Senior Manager of the Corpo-rate Communications told Singapore Business Review.

Some users how-ever tweet of finding themselves still unable to make and receive calls and text messages.

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56%56% of Asia-Pac financial services firms unaware of security threatsunfortunately, hindranc-es exist in preventing the implementation of sufficient IS, with the core reason being a lack of investment budget.

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AvIAtION

Singapore in Action

Guess which top 10 SGX listed companies were not ranked as Sin-gapore’s best run companies?Financeasia.com news website has polled institutional investors and other fund man-agers on which com-panies they reckon are the best managed in Singapore.Wilmar, SIA and the and the Jardine listings all failed to impress investors. Olam was on the list and got 14 votes.

Investors’ ques-tions to Profitable Plots directors go unansweredThe directors of this failed investment scheme are refusing to talk to them.

SIAS announced that it would take up the plight of investors in the Profitable Plots saga. The investors claim that they have not been kept informed of their investments and that their requests to meet the directors through the lawyers.

Lufthansa introduces new charges on excess baggageThe German flag carri-ers says the new rules are in line with new IATA standards, but charges for bringing on a second piece of lug-gage start at 50 euros a sector to set standards by IATA 302.

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0319 Singapore Business Review 280x210-Group.pdf 1 5/10/11 12:10 PM


After seeing its home base market eroded by both local budget carriers and

international ones, Singapore Airlines is finally fighting back with its plan, announced late May, to launch a long-haul budget carrier. The name of the new carrier hasn’t been decided as yet but it matters little. Singapore Airlines is fighting a two-front war against the low cost carriers on one side and Qantas on the other. The last three years have been kind to Singapore Airlines’ profits but not to its market share. Just three years ago SIA accounted for 50% of all seats flown out of Changi, but by May this year that had shrunk to around 35%, notes Brendan Sobie, the chief representative Southeast Asia for the Centre for Asia-Pacific Aviation. If aviation is about volume and size, Singapore Airlines is shrinking fast, and has seen its passenger traffic drop by 15% from 19.1 million in FY2007-08 to 16.6 million in FY2010-11. While this was a challenging period for the entire airline industry, Changi was still able to grow its passenger throughout by 15% over the same three fiscal years, from 37.3 million in FY2007-2008 to

42.9 million in FY2010-2011, notes Sobie.

Alarm Bells“This has set alarm bells ringing,” he adds, noting that the flag carrier’s strategy over this period has clearly been to prioritise profitability over expansion. “But in the fast-growing Asian market this can be a risky long-term option, leaving the way for other competitors to expand and grow their network strength.” Paul Yong, VP of Equity Research at DBS Vickers says he thinks the decision is more of an attempt by SIA to grow its revenue stream as it has been losing market share in the past couple of years to more aggressively expanding carriers such as Emirate and also LCCs. “As the LCC market is growing more quickly, the move to set-up a separately managed and branded entity is an attempt to re-grow its market share without diluting SIA’s premium positioning.” Of course, other Asian airlines are now looking at establishing budget offshoots, chief of which is Thai Airways. But details remain scant, and DBS Vicker’s Yong says the decision has more to do with Jetstar than Thai Airway’s

Singapore Airlines’ passenger traffic has dropped by 15% in FY2010-2011.

venturing into the low-fare segment as the former competes more with SIA. “Although Jetstar does not compete directly with SIA (low fare vs premium), SIA’s new venture will allow the SIA Group to gain more traction in the mid and long haul-low fare segment, which both Jetstar and AirAsiaX are into.”

Qantas threatPerhaps the biggest threat to SIA is not the budget carriers, but Qantas, which is mulling setting up a full service airline based out of Singapore which can then link into its Jetstar service for short haul. Sobie says SIA’s Aussie archrival, including Jetstar and Jetstar Asia, have a 10% share at Changi, and this could rise dramatically of the carrier decides to open up another airline in Singapore. “Low-cost airline groups AirAsia and Tiger now each have 7% shares. The Qantas Group, AirAsia Group and Tiger market shares are all expected to continue increasing this year at the expense of SIA Group, as they are all adding capacity at double-digit rates compared to a planned 6% capacity increase at SIA Group,” says Sobie.

It is the battle for passengers to

Dog fight at Changi Singapore Airlines is in a two-fronted fight as its market share dwindles, reports Jason Oliver


FIRST

A low-cost subsidiary is necessary for SIA to grow again.

and from Australia that is critical for SIA with Down Under accounting for 17 % of its revenues. Jetstar and Jetstar Asia, for example now operate from Singapore to Auckland and Melbourne with at least two more long-haul low fare routes expected to be launched in 2H2011 and they are ideally positioned to capture much of the expanding Asian markets, notes Scobie, who adds that SIA is likely also to use the new airline to try to retain its share of the Australian market.

“In the key Australia-Europe market, SIA is fighting growing competition from Emirates, the new V Australia/Etihad combination and Qatar Airways. Between them these carriers operate over 20,000 weekly non-stop seats to the Gulf, according to OAG, most of them competing directly in the Australia-Europe market. SIA, which dominated the sixth freedom Europe market a decade ago, still has over 30,000 weekly seats, but the equation is shifting fast. Qantas, even more exposed than better geographically placed SIA, is also being forced to step up its fight for this market, using Jetstar and potentially a new Singapore-based carrier to launch European routes,” sais Scobie.

3 airline brands, one giant hangerIn the meantime SIA will have an even bigger challenge of integrating what will be three separate airline brands. Already there are signs that the lines between Silk Air and SIA are getting blurred on short haul sectors. Traditionally Silk Air did the short haul flights and SIA the long

haul, but with so much competition for regional flights SIA is now flying both airlines on the same route. For a while both have plied the KL to Singapore route, but in June, the airline announced both would also service Calcutta to offer seven flights a week. Expect more of this as the lines blur between routes serviced by SIA and little brother Silk Airlines. Throwing a third, albeit budget airline brand into the mix does raise the question of the long-term value of keeping Silk Air separate as opposed to streamlining operations and folding it into Singapore Airlines.

Singapore Airlines is also doing more code share deals; it recently concluded one such deal with Virgin in Australia, but in reality, had little choice of carriers to work with down under as the other carrier is Qantas/Jetstar.

What does this mean for the future of SIA ?Not much, for now. DBS Vickers’ Yong says he doesn’t expect this new venture to significantly cannibalize demand for SIA’s own routes directly, given the expected pricing differential, but more capacity on any route would always put downward pressure on ticket prices, which is positive for consumers.

“Funding would not be an issue since SIA is in a strong net cash position and immediate seeding of this venture is likely to come from SIA’s own current fleet of B777s.”

The Centre for Asia-Pacific Aviation’s Scobie sees the new direction clearly coming at the

behest of the new executive team, led by CEO Goh Choon Phong, who is apparently not willing to watch the group stagnate and continue to lose market share. “Establishing a long-haul low-cost subsidiary is a bold move but necessary for SIA Group to again grow. The message is that the carrier, despite its very high quality product, cannot grow profitably by only focusing on the top end of the market,” he notes.

Better late than never ?SIA is coming very late to the budget party, and perhaps the biggest strategic miss made by the group was to not see the threat posed by low-cost carriers to its business when the Singapore government opened up the space in 2004. They could have started a budget carrier then but instead took a minority stake in Tiger. Says Scobie: “Given Tiger’s separate ownership, the LCC has been unable to play a complementary role to SIA - unlike Jetstar to Qantas. SIA has since steadily lost market share. Today to launch its own short-haul low fare subsidiary would be too complicated and risky. Tiger, AirAsia and Jetstar have this market well covered.” Still there is no turning back the clock, but long-haul budget carriers are not without their risks. Oasis, which was Hong Kong’s first budget long-haul carrier, launched with much hubris in 2006 but was dead just 2 years later. No doubt that is something Singapore Airlines will be keeping at the back of their minds as they try to run three different airline brands under one hangar.

Changi Airport capacity share (seats) by carrier

Source: Centre for Asia Pacific Aviation & Innovata

SIA passenger numbers vs Changi passenger numbers: FY2006 to FY2011

Source: Centre for Asia Pacific Aviation and company reports


It has been a long time since theAsian financial crisis but as memories fade, so does aversion

to debt. The last ten years following the crisis saw companies actively de-leveraging their balance sheets by raising equity and retaining profits - this, to the extent that they were some of the best capitalized companies in the world. But those days were finally over as Asian companies, now headed by much younger management with less vivid memories of the ill effects of debt on businesses when the economy crashed, have started to pile on bank

After a decade, Asia’s corporates gear up

loans and issue corporate bonds.Cheap money, no matter what

currency, is also fuelling this debt binge. Investment bank Morgan Stanley has crunched the numbers and said that while this re-leveraging trend is only starting to appear slowly, the momentum is clear and the trend is broad-based. “In spite of the +16% increase in EBITDA year on year, 39% of corporates – a universe that is made out of 319 members of the MSCI Asia Ex-Japan index excluding Chinese and Hong Kong corporates that don’t report quarterly – increased

leverage in 1Q11 In terms of breadth, Philippines tops the regional re-leveraging trend, but the momentum pick-up is the strongest in Korea.” And a closer look at the numbers will show that the debt pile up is set to gather pace as Asian corporations will be needing more money to fuel their operations.

“Corporate Asia’s funding position − cash plus free cash flow (based on Morgan Stanley Equity Research forecast) less short-term debt, a key metric which gives us an idea of funding needs ahead – is expected to deteriorate over 2011 for the first time since 2009 and for the first time since 2006 against a backdrop of healthy profits, i.e., it’s deliberate. Funds will need to be raised in the coming year.”

Rapid re-leveraging can’t be expectedSo why would corporate Asia leverage up today? After all, the incremental change in 1Q11 is small and the increases in Asia in 2004 or 2005 never materialised in significantly higher leverage, notesMorgan Stanley.

“We think deleveraging is over, but we don’t expect rapid re-leveraging either because the incentives for that are still only mixed. The case for re-leveraging is that the cost of debt is cheaper than it’s been at any point in the past two decades.

The case against re-leveraging is that non-leveraged profits in Asia are still sufficiently high to avoid shareholder pressure for aggressive corporate action.”Asian corporates fund themselves via bank loans, local currency bonds and USD/G3 bond markets and whilst the cost of debt is going up in local currency terms; it’s been flat to lower in USD terms while banks in some regions are tightening credit standards as others are not, notes Morgan Stanley.

“On a blended basis, however, the cost of corporate debt – at 2.9% − has never been this cheap in Asia. At a minimum, that justifies locking in long-term debt funding through terming out debt profiles, something companies have been doing. But against an implied cost of equity of 12%, the temptation to add leverage should be unusually high.”

The cost of corporate debt – at 2.9% − has never been this cheap in Asia.

Who Is Leveraging Up in Asia?

Sources: FactSet, Morgan Stanley Research estimates

Leverage Is Cheap

Sources: FactSet, Morgan Stanley Research

FIRST

Time to duck down to the bank for a quick loan

SST010_Boardroom_SBR280x210W_SG_V3_e01p.indd 1 5/23/11 5:09:10 PM


Asian hedge funds find it hard to attract significant capital.

“Among the hedge funds, it is likely that the relentless initial volatility led to exposure being whipsawed by trading rules designed to control risks but actually, in this instance, deriving losses. Equally, the relatively meager returns since the low of the market may have been the reason for the spate of redemptions. Either way, it appears that, while the global hedge fund industry has strongly recovered from its low point and reached a new all-time high in assets under management.”

Poor performanceAnother interesting observation of the Asian hedge funds was that, in general terms, the larger the size of the fund, the poorer the long-term performance. A sample of hedge funds, which were of a size above the “poverty level” of $25 million, found that investors’ preference for larger funds certainly does not appear to have been driven by performance. Whilst the top 10 hedge funds accounted for 88% of assets under management in the sample, “it seems that the 20 largest funds have persistently underperformed over all time frames from 1 month

FIRSTto 10 years. This presumably can be read as support for the age-old fund management truth that performance and funds under management tend to show inverse correlation,” notes Wolter.

The 20 largest funds have seen total assets, including performance rise by 29% over the past year, roughly twice that of the overall sample which is 15%. However, when it comes to performance, the 25% smallest funds, which represent just 1.5% of assets, have persistently outperformed the 25% largest funds, which account for 83.2% of all money managed within the sample. Still, the hedges do continue to beat the mutual funds and ETFs, especially in the long-term run.

“Beating both their long-only and ETF competitors over three and five years illustrates the beneficial consequences of going with managers who operate within flexible mandate structures and tend to have interests closely aligned to their investors. Considering the substantially heavier fee structures, these numbers are very good, in our view, and show that cost in isolation is rarely the best individual selection tool when it comes to funds,“ notes Wolter.

Promise of growthFor the time being, the reality remains that Asian hedge funds find it hard to attract significant capital, certainly relative to the overall global hedge fund industry, which was reported by Hedge Fund Research to have seen total assets exceed its previous peak of US$3trn at the end of March.

“Part of this momentum would likely be the result of the average global hedge fund supposedly having returned 1.6% year-to-date, in contrast to the 0.5% increase the average Asian fund appeared to have realized find it difficult to attract significant capital.”

By contrast ETF funds managed in Asia jumped 28% over the past year and the growth rates outstrip both hedge and long only funds. And in RBS’ sample, a third of the ETF funds didn’t even exist a year ago, which means there is significant growth in the category. Perhaps the future really does belong to the machines that run the ETFs.

Hedge Funds may be useful, but when it comes to investing in Asian equities

it is still the traditional mutual funds that hold sway with the investors’ money. The much vaunted exchange traded funds, while popular in the public imagination as a quick and cheap way to invest in a market, remain a very small part of the Asian investment world.

Investment bank RBS could only find 36 dedicated regional ETFs with just US$17bn invested in them. Meanwhile from a sample of 82 Asian hedge funds tracked by the team, their total fund size was just US$12.7 bn, up a meager 15% from a year ago.

Sizing it upSo is this a good performance ? It is hard to say, but one telling figure is that the MSCI, a measure of market performance, is up 22% for the year, which suggests that Asian hedge funds may actually be losing assets under management. Worse news for the hedgies is that only a few funds sampled actually met their objective – such as beating the index. As RBS analyst Emil Wolter notes,

Asian hedge funds swimming against the tide

Singapore may be in for an unprecedented boom in tourist arrivals from China

as Mainlanders begin to travel the region and spend up big when they arrive. In Hong Kong, they are considered the bulwark of Hong Kong’s tourism and retail industry. Four of every ten mainlanders who travel abroad go to Hong Kong.

Mainland tourists also account for 30% of retail sales, and 60% of tourist spending in the Hong Kong. In Singapore, their numbers are still comparatively small but rising fast., and the wealthiest are coming to Singapore, where they can visit a casino or go on a shopping spree.

The rise of the Chinese tourist marketThe outbound Chinese tourist market is the third biggest in the world at US$55bn in 2101. It is expected to become the world’s largest at $150bn by 2015, according to a report from UBS. In comparison, the Germans currently spend $75bn on international travel,

Mainland tourists: easy come, easy go ?

while the Americans spend $73bn.It has been a short and rapid rise

to the top for the Chinese, who, until 2002, were limited by quota to visiting Hong Kong and independent trips to other countries were almost unheard of. Today, most Asian countries are on the approved list for individual travel, and these are the countries that are trying to lure the Chinese tourist.

“The total number of departures rose to 57mn in 2010, an almost five-fold increase from 2001. Still, only roughly 4 overseas trips were made per 100 Chinese in 2010. As a reference, the respective numbers for Korea and Taiwan is 26 and 40,” said Silvia Liu from UBS.

Boost in tourismBased on projections from the IMF, China’s per capita income is expected to increase from the current US$4,200 to US$7,200 in 2015.

In 2010, 23 million mainlanders visited Hong Kong, which is far more than the rest of Asia combined. But Korea, Taiwan, Singapore and

Thailand all receive more than 1 million visitors from China annually, and these numbers may be set for a big boost.

However, it is Singapore that has made the biggest investment in tourism infrastructure, making a capital investment equivalent to 5.3% of GDP in 2010. By comparison, Hong Kong’s investment in tourism was just 2 % in 2010.

Challenge for TaiwanTaiwan is on many mainlanders’ list but still struggles because of government limitations. Even though Taiwan finally opened its door for Chinese tourists in 2008, the barriers to travel remain high as tourists are still restricted to group tours and there is still a daily quota of 4,000 visitors.

Even though the Individual Visitor scheme for Chinese tourists is expected to start in late 2Q11, the reported daily quota of 500 is just way too small to have much impact, notes UBS’ Liu.

Now that the high rollers and biggest spenders are increasingly spreading their wings further offshore, can Hong Kong continue to take its mainland tourists for granted?

Singapore that has made the biggest investment in tourism infrastructure, making a capital investment equivalent to 5.3% of GDP in 2010.

China already a big spender on outbound tourism

Sources: CEIC and UBS calculations

Sources: CEIC and UBS calculations

Asia Mainland tourist arrivals

FIRST


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The Rise of the mobile workforce

It’s a common practice these days. Wher-ever you are, all you need to do is pick up your smartphone or wireless device and

check emails that have been pushed from your inbox. You can then respond to urgent mails or use instant messaging. Welcome to the modern, mobile working world.

With the availability of faster network ac-cess, wireless devices such as laptops, tab-lets and smartphones, the traditional office space can be re-created just about anywhere as employees are “always on”, surfing the in-ternet, communicating with colleagues and others through instant messaging (IM) plat-forms, and accessing data and applications critical to the business. It is estimated that by 2013, the mobile work population will grow to 1.19 billion, accounting for 34.9% of the workforce. IDC analysts report that the larg-est numbers of mobile workers today are to be found in the Asia-Pacific region. The Info-comm Development Authority (IDA) of Sin-gapore conducts a half-yearly statistical study each year (Statistics on Telecom Services), and in February 2011, it revealed that the repub-lic had a mobile penetration rate of 144.2%. This statistic meant that the average resident in the country owned and used 1.4 mobile

devices on a regular basis. This trend is both bane and boon to busi-

nesses – on one hand, employees are deemed more productive regardless of where they are. On the flipside, IT departments in com-panies face new challenges as employees be-come more mobile as they need to find ways to monitor and secure the online interactions of roaming workers.

Your business never sleeps. The threats don’t either.As IT teams and managers grapple with a growing mobile workforce, an evolving

threat landscape and the ever-present chal-lenge of maximizing resources, many compa-nies are turning to hosted solutions or cloud-based assurance models to deal with security and management issues. Cloud-based man-agement goes one step further than tradi-tional internal infrastructure-based security controls. Instead of machine-by-machine, on premise installation, employees everywhere can access the same cloud service, which is operated and managed centrally over the Internet.

With email, web and IM traffic being redirected to the hosted service provider, in-house IT personnel can focus on other business critical projects. This takes the pres-sure off organizations to maintain skilled resources to manage and secure the work-force. Moreover, cloud-based services offer a lower total cost of ownership (TCO) when compared to in-house solutions as they are designed to watch out for and stop threats before they infiltrate a corporate network.

However, prior to adopting this comput-ing model, IT departments must understand and believe in the efficacy of cloud-based services. In addition, consider the impact on your business: Using services with automated capabilities to enforce end-user policies can help gain and/or maintain the confidence of customers and business partners. Cloud-based security solutions are the way forward for integrated and all-round protection.

CONTACTwww.messagelabs.com.sg


“A deliverable RMB market in Singapore possible as early as 2012.”

Offshore RMB market takes off in Hong Kong as Singapore poised in pursuit It has not even been a year since

the Chinese government allowed its currency, the RMB to be

traded and settled outside its borders. But since the opening of that window in August last year, the amount of Yuan on deposit outside China has swelled to CNH450 billion, and should reach a CNH 1 trillion by the end of the year.

It has by all measure been a phenomenal success, but not one that is totally unsurprising. This, of course is fuelling a massive market in trading the US dollar with the CNH, a spot market that now has a turnover of an excess of US$1 billion daily, according to estimates from HSBC.

The future market is also active with around US$800 million of contracts traded daily, making this a lucrative new market for traders and investors. The CNH market is set to overrate the NDF market, which currently turns over around US$4 billion daily, sometime in 2012.

This is logical, as HSBC notes, as the functional uses of the CNH market such as funding, trade settlement, investment, and placing deposits far outweigh that of the NDF market which is primarily used as a directional currency play.

Accordingly, analysts expect that the number of market participants in the generalized CNH market will soon outnumber that of the far more specialized CNY NDF market, which in turn helps maintain the pace of growth.

FIRST

So just how big will the market grow ? CNH is still small compared to the daily turnover of other Asian currencies, which means rapid growth will continue for a while yet. One thing that may precipitate a move from the NDF to the CNH market is already happening. Many longer-term investors in Yuan are switching their holdings from the NDF market to the CNH market, not only because the asset-class has advantageous characteristics such as better yield and is a real rather than derivative asset), but because, as HSBC notes, as the CNH market develops and matures, it appears inevitable that it will sap the activity and liquidity of the NDF market.

Enter Singapore ?At first glance Hong Kong would seem the natural centre for trading in CNH as much of China’s trade goes through there and people are natural holders of Chinese currency. However Singapore is upping the anti and is trying to establish itself as a serious player in the CNH trading market. Several Singaporean-based banks including Standard Chartered and Maybank revealed plans to this publication to establish a CNH/RMB business. And China announced itself that it would establish a third RMB clearing bank to be based in Singapore, the other two being Bank of China in Hong Kong and Bank of China Macau. Presumably the Bank of China will get the green light to do

the same in Singapore and they may even need a bigger office than their current older building on Battery Road.

As HSBC notes, a local RMB clearing bank would be an important foundational element for an eventual offshore RMB trading platform, as it would allow local banks to deposit RMB reserves locally, as well as more directly facilitate cross-border RMB trade settlement, both of which currently require use of the Hong Kong platform. So can Singapore challenge Hong Kong or indeed become a serious player ? Maybe not so fast, notes HSBC, which says that the establishment of a clearing bank is relatively straightforward compared to coming to an agreement on regulation and management of other aspects of a potential deliverable RMB market, something that was a relatively easier hurdle for Hong Kong, which is ultimately implicitly overseen by the mainland.

“However, with both sides likely to be highly motivated to push this forward, we will likely see significant development this year, with a deliverable RMB market in Singapore possible as early as 2012.” This development would expand the CNH regime currently in place in Hong Kong, rather than create separate competing systems, as CNH is already freely transferable offshore. The offshore RMB exchange rate, known unofficially as CNH, will be applicable in Singapore.

China’s total bilateral trade is still larger with HK than Singapore

RMB deposit base has grown exponen-tially in Hong Kong

The manufacturing slowdown startsBe careful what you wish for may well sum up how Asian policy makers are feeling about their economies right now. That is because the long anticipated slowdown on manufacturing across the region is beginning to show up in official figures, and like Goldilocks searching for a ‘just right’ meal, policy makers have to walk a tightrope between higher interest rates to stop asset bubbles and lower rates to keep investment and jobs in manufacturing alive.

What stands out? Our long anticipated manufacturing slowdown in Asia is gaining momentum. The good news is that weaker economic growth should lead to a respite in inflation later this year, which could stall monetary tightening. According to economists at UBS, recent data shows that Asia’s red hot manufacturing sector has started to slow more visibly. In particular, they note, China’s industrial output slowed to 13.4%y/y in April from 14.8% in March; Korea’s output slowed to 6.9%y/y from 9%; Taiwan’s output slowed to 6.9% from 13.7%.

Don’t blame the tsunamiThe tsunami may have disrupted Asian

FIRST

supply chains, but its effects are probably fleeting as a slew of data points to a slowing world economy.

Broad-based regional manufacturing weakness, plus a synchronized slowdown in global leading indicators (the US ISM, China’s PMI and Germany’s IFO),

shows Asia is entering a period of weaker economic growth, notes the bank In the near term, slowing growth with rising inflation presents an unfriendly macro backdrop for the markets, notes UBS. Still, lower economic growth is probably better than higher inflation.

GDP: Contribution to Growth in Singapore

Sources: CEIC, UBS

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Social media’ only accounts for less than 1% of conversion to sales.

marketing events held all over the world every year, is clear though: digital growth continues to be exponential, albeit from a smaller base, with online ad spend in Singapore increasing nearly 50% year on year in 2010 - up to S$95 million, according to Singapore’s Media Development Authority.

Tired of Social MediaHowever, despite the growth in demand and spending, advertising agencies are under a great deal of pressure to become more holistic and are being forced to consolidate their departments and provide cheaper, ‘one-stop-shops’ for clients who are tiring of having ‘social media’ thrust upon them as a some kind of panacea.

FIRSTAdvertisers are aware that

‘social media’ only accounts for less than 1% of conversion to sales and that recommendation sites, such as TripAdvisor, appear much more valuable to consumers than Facebook or Twitter.

Some introspection is evident within the industry and agencies are asking themselves if they are still at the creative leading edge. It may well be difficult for them to adapt as the lines between content and advertising are blurring - especially with Google creating much of the disruption with a new trend of turning adverts into content driven websites.

YouTube, the Google owned video service where 48 hours of video is uploaded every minute, has moved to turn movie trailers into a participation experience - an example is that of Kung Fu Panda 2 where the viewer is asked to play a game with the panda.

Ominously for advertising giants, Google recently ran a crowd-source test of a major advertising campaign in Japan.

Several ads were created and metrics were run in conjunction with YouTube viewers to see what the most attention grabbing part of each commercial was - they were then used to build an extremely effective push for the Chrome browser - that ended up on television and in print, as well as online. The real shock for agencies could conceivably be that they have to compete with new global crowd-sourced creative movements that are run directly by companies formerly considered clients.

There is also talk of ‘total audience attention coverage‘ and the ability to seamlessly follow users with advertising moving from their phones, to desktop computers, to outdoor, back to their phones and TVs - controlled using the GPS signals in the devices, all the while making suggestions based on environmental conditions (hot chocolate on a cold day in 100 meters at a coffee shop coming, etc).

This ‘dynamic ad serving’, from when you wake up to when you go to bed, used to be the domain of the agency but has been proposed and developed by the world’s biggest advertising company of all-Google.

ith Procter and Gamble announcing its tie up with social media darling

Facebook and Google being on track to break the one billion global visitor threshold - surely the internet has taken over the advertising world?

Apparently not quite yet: after 16 years of being a ‘new’ medium, the internet’s rise is slightly less meteoric than one might expect - and the reality is that advertisers know that to get an instant message to a massive audience, the tried-and-tested media of television and print are streets ahead. The mere fact that a Super Bowl advert will be shown to over 100 million people simultaneously, as opposed to waiting months for that size of audience online, is indicative - and priced accordingly.

Tellingly, both the Financial Times and Wall Street Journal, two global leaders in daily business news, admit that their digital platforms are generating a fraction of total revenue in comparison to their daily printed newspapers. The figures aren’t good: 224,000 and 400,000 ‘paid up’ digital subscribers respectively.

Sentiment at ad:tech Singapore 2011, a showcase series of digital

Social media still struggling to pay dividends for companies

2011(%) 2007(%)TV 41 37Newspapers 20 27Magazines 9 12Internet 15 9Radio 7 7Outdoor 7 7Cinema 1 1

Global AD spend

By Alexander Knight

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Nokia E7.Success finds itself in good company.- Touch and type plus large 4” screen- View, edit and create documents- Multiple email accounts- 8 megapixel camera, HD filming and HDMI output

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GAME CHANGERS

inspiration and ideas. It’s always a pleasure working with like-minded people who work hard pursuing dreams and visions.If I have to name one thing I hate, it is meeting people, but meeting those who try too hard to impress. Internet is a people business. It’s not as cold as what many think but it is people who are using your product, not machines.

SBR. How does the “mook” work?Nicole: Mook is our new online magazine - Mook because she is part book, part magazine. She has a limited edition print volume. The online mook is able to tell a story what a printed magazine could not, example watch a video! We are exploring to develop more functions within mook, she will be one of our core products for cozycot.com in 2011. Circulation is a limited edition of 5,000 only and online is above 150,000 readers.

SBR. How is it different from anything else out there?Nicole: Mook is the voice of our readers, our members. We take the everyday massive contents from our website, from our readers and put together what is closest to our members’ hearts, and make it classic and pretty. CozyCot mook is about who you are, we tell your story to the other readers. It’s not about us but about you - our users, our members, our fans.

SBR. What is your view on the role for print and the role for online in media?Nicole: Print is traditionally to inform. Online is virally to influence and engage. I am not trained in traditional media and I like to think it will stay, but online will be the mode of communication to our generation and the many more to come.

SBR. What else are you working on?Nicole: I have many dreams, the challenge is to find likeminded people who are real passionate about life and not fake it like they have it. I am working on a project that users, men and women alike, will use before they go shopping! I am, as usual, excited when one project takes off, and start another from ground 0! I love to speak to people who can contribute to our projects so if you think you are the one, email me: [email protected]

SBR. Nicole, how did you get into the business? Nicole: It was year 2000 when the dot.com bubble was going bust, websites were shutting down faster than they were being built and there was nothing I liked and I thought I might as well take things into my hands and build my own hobby. And it is during the Internet drought, my hobby was screaming for attention to have a platform to share tips on beauty, fashion and other shopping related information with like-minded women. In July 2001, the domain CozyCot.com was registered and here we are, 10 years later she is the no. 1 women’s and beauty website.

SBR. Everyone wants to do a women’s website, why have you succeeded where others haven’t?Nicole: There are many gorgeously designed, well developed websites but the intention and vision of developing a women’s website make the difference. It’s a key that we have to balance - did we build it for users, or did we build it for investors? Both are equally important factors to the success of a website.

I believe CozyCot.com is blessed to have her fans working hard to build their dreams, not just mine. Although in the early years I pressed on while others procrastinated and dropped out of the game, too soon. Our team run the race on a 3F theory and that’s Fun, Fame and Fortune. Have fun while you are at work. If you are getting angry with your work, it’s time to move on. Don’t make it miserable for yourself and others. Make a fortune for the people and investors who believe in your dream.

SBR. What do you love / hate about your job?Nicole: My work allows me to meet some very smart, interesting and inspiring people. We tap into one another for

Cozycot’s new mookFounder Nicole Yee explains how she is changing the world of fashion media.

Nicole Yee The Mook


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The Mook


I was flown to Star City at Baikonur in Kazakhstan for a tour. At the time, few Westerners had been

allowed into that secret world, the workshop where Soviet sci-entists had created the Sputnik satellite, the Vostok, Voskhod and Soyuz manned missions, the Salyut space station – and the ballistic missiles that had once threatened the West.

The Russians negotiated with entrepreneurial zeal, offer-ing me the once-in-a-lifetime opportunity of becoming the first space tourist, through the Russian space program.

The price tag? Over $30 mil-lion.The idea of spending that much money on myself felt immoral. It made me question the ridiculous economics of putting people in space, and it sparked my search for the busi-ness breakthrough that would make space travel possible for thousands of people, rather than a select handful.

Next came the unseen part of entrepreneurship, the part that nobody ever discusses because, to be fair, there’s not a lot to discuss. The secret to success in any new sector is watchful-ness, usually over a period of many years. Our search for a way into space led us to a brave new world of exotic materials and untried designs, spin-offs and business opportunities, a thriving community of small companies and driven individ-uals supported by engaged and well-informed philanthropy.

The tipping point for com-mercial space travel came in May 2004 when space en-trepreneur Peter Diamandis announced the Ansari X Prize.

It was backed by Anousheh and Amir Ansari, who donated the $10 million to be awarded. The X Prize set a simple challenge to contestants: carry three people 100 kilometers above the Earth’s surface, twice within two weeks.

There were three serious con-tenders for the prize. The most promising was Burt Rutan’s company, Scaled Composites, which had unveiled its space program the previous year. Burt’s ship, SpaceShipOne was to be carried into the upper atmosphere by a mother ship – a lightweight plane called White Knight – and launched in flight. I wrote to Paul Allen, Scaled Composites’ financial backer, and proposed a 50-50 joint venture.

In September 2004, Burt and I announced the launch of Virgin Galactic. We signed a $21.5 million deal with Allen’s company for the use of the technology, and announced that we had developed a $100 million investment plan to de-velop a prototype commercial six-seater spaceship at Burt’s factory in Mojave, California. It was a terrific deal for us because the Virgin Galactic brand-ing would now be on Space-ShipOne if it took the Ansari X Prize in October. This would deliver a message that we were a serious player.

About SpaceShipOne’s de-sign, fabrication, execution and flight behavior that wasn’t new and unusual. As we anticipated, on 29 September 2004, Space-Ship One reached its apogee of 337,600 feet, or 103 kilometers. This was space. On 4 October 2004, SS1, with test pilot Brian Binnie at the controls, reached 367,442 feet above the Earth

and took the Ansari X Prize.27 July 2005, in Oshkosh,

Wisc., Burt and I announced the signing of our current agreement. The new company we were forming would own all the designs of SpaceShipTwo and the White Knight Two launch systems that were being developed at Scaled Compos-ites. The new business, the Spaceship Company, would be jointly owned by Virgin and Scaled. Burt’s company would undertake all the research, development, testing and certi-fication of the two craft.

At present we have many space tourists signed up for future flights; we are conduct-ing test flights on our ships and building a spaceport in New Mexico. Another potential arm of our business is its shuttle capability.

The last NASA shuttle flew last month; the shuttles carried 51,000 pounds into orbit, at a cost of around $450 million. We and others in the emerging space private sector are working toward the day when White Knight Two will be able to take 28,000 pounds to 50,000 feet and launch it for a much lower price.

And in the future, our ships may be able to take payloads farther out into space. While Virgin Galactic must con-centrate on its original plan of space tourism, these are all options for our business to grow its revenues and technol-ogy base.

Virgin will move into the space industry. We have the expertise and experience of moving people around the globe, safely and securely. Space tourism is an industry that’s go-ing to be fun – for all of us!

“The secret to success in any new sector is

watchfulness, usually over a

period of many years.”

opINIoN

Our galactic adventurerichard branson


Our galactic adventurehy is Singapore Airlines the most admired brand in Singapore and yet Tiger Beer is only 83rd?

Tiger Beer seems to have a marketing problem. Anyone who has seen one of their adverts or been to one of their numerous events will have seen several different creative executions appealing to very different target audiences. Half the adverts feature international expats and the other half feature Singaporeans. Never do the two meet. The football adverts are very focused on expats whereas the getting together to share the Tiger experience always appear to be focused on Singaporeans. However both groups see both sets of creative and therefore must wonder why they are sending out different messages to different people.

I always think that events are a poor man’s way of marketing, they don’t actually reach many people (only the people attending or those who see it in the press – if it is featured which they mostly are not as media see right through them as being cheap marketing stunts) and are a very high cost per customer’s opportunity to see/experience. They are mostly to satisfy marketing director’s egos or board of directors’ whims to make them feel good about their brand.

They are surrounded by people who love the brand…. but there aren’t many of them and they don’t reflect the broader spectrum of customers so they get a skewed view of how well the marketing and brand are going down. Tiger do a lot of events which might explain why they are not especially admired in Singapore. They think they’re doing a great job because that’s what they get told at events whereas the wider public disagrees but the directors never get to hear their views.

Widely known, but admired ?The ‘Tiger Translates’ series of events and art inspirations really contradicts the football and male focus of the main marketing. It’s almost as though Tiger are marketing a different brand through Translates that they are trying to appeal to a different audience through. To most people it’s confusing. It can’t be both arty and football focused and when one target audience sees the other side that surely that sends different messages and then turns a customer off rather than enhancing their brand affinity?

Considering the massive amounts of money that Tiger spends in Singapore and globally

marketing itself, the fact that this is its home and you see the brand everywhere, and it is locally recognized as being a global standard bearer for Singapore, I would have thought it would be more admired. But trying to be all things to all men in its marketing has clearly confused its brand values. It’s meowing rather than roaring!

Singapore Airlines on the other hand is very Singaporean. It does what it say it will but nothing more and nothing less. It is not risk-takers in its marketing or in its product and service delivery. It is a polished brand that make you feel good when you travel with it. But they are not exciting or thrilling or even especially adored or that people can get passionate about.

It is admired for all the reasons of quality of service and customer experience that you would imagine from a 5 star airline.

But I wonder whether it is admired as you admire your Uncle or Aunt for setting up their own consultancy or chartered accountancy firm nor admired as you might passionately admire a famous footballer who scores an amazing goal or a rock star that delivers a heartbreaking song so passionately you feel his pain and relate to the experience. Nike, Apple, Google deliver excitement, wonder and passionate admiration and yet they were all beaten by Singapore Airlines in the most admired list.

Is that because Singapore citizens prefer safe to exciting, trusted to thrilling, emotionless to passionate?

bY chris reed

But trying to be all things to all men in its marketing has clearly confused its brand values. It’s meowing rather than roaring!

oPinion

“

Singapore Airlines versus Tiger Beer – why brands are admired or not in Singapore

ChriS reedPartnership Marketing, Singapore Airlines, Tiger Beer

W


Is anything holding you back from growth?How do you feel about the Singapore economy over the coming 12 months?

Can you still buy your kid the next iPhone?

For more information contact: Nielsen, Margaret Lim ([email protected]); Synovate contact Tim Hill ([email protected]); TNS Global contact Khaw Mei-Ling ([email protected])

NuMbERS

Will you purchase Smartphone in the next 12 months?Singapore

Synovate Business Consulting online surveyedNote: Data are from 146 business executives across all industries

Synovate Business Consulting online surveyedNote: Data are from 146 business executives across all industries

Social Networking Sites are highly popular in Hong Kong and Singapore

Hong Kong and Singapore teens are heavy social media users

Activities done through mobile phoneSingapore

Source: APAC: 13,500; HK:600; SG:600 Source: APAC: 13,500; HK:600; SG:600

APAC 52%

93%HK

85%SNG

Several times a day

About once a day

A few times a week

About once a week

17%58%

50%

11%18%19%

11%11%

15%

11%5%

8%

About once a month

Never

8%

31%

2%

6%

5%

4%

APAC

HK

SNG

Definitely / Probably will NOT purchase

Not SureDefinitely / Probably willpurchase

Source: Nielsen Global Online Omnibus Source: Nielsen Global Online Omnibus

SMS95%

39% 31% 30%

51% Mobile Internet

43% Email

31% Instant Messaging

31% Play Games

TaylorMade Golf, which is a part of the adidas Group, has led the golf industry’s technological revolution for the last

three decades and their metalwoods, irons and putters have been used to win countless professional golf tournaments around the world. According to Tomo Bystedt, Director of Prod-uct Marketing and Brand Communication for Asia, TaylorMade-adidas Golf, Singapore and Asia are key markets for the company where they have maintained a solid leadership posi-tion: “As a company focused on growth and market leadership, we recognize the unique importance of the Asia as emerging golf mar-kets where we want to maintain a leader-ship position. Singapore itself is important as a hub and influencer of the golf markets in Southeast Asia.” TaylorMade Golf’s secret to success has been its constant product innovations over the years and the last year has seen a number of breakthrough products which has been well-received by professionals and everyday con-sumers alike. “First and foremost, we aim to create the best performing golf products in all categories – everything else follows from that,” says Bysedt.

The “TaylorMade Top 4”R11 Driver – “All white is alright”The R11 has rapidly risen to become Taylor-Made’s best-selling driver of all time and the most played driver on Tour. Although the

product was originally intended for mid-to-low handicappers, the adjustability technolo-gies (Flight Control Technology, Movable Weight Technology and Adjustable Sole Plate) allow many higher handicap players to enjoy the performance benefits the R11 provides. The white colour is a very important technol-ogy that provides three important benefits to the golfer: better alignment through im-proved crown/face contrast, sharper focus through reduced “hot-spots” and reflections, and more confidence due to a larger visible head size.

Tour Preferred Irons – “Forging Ahead”These irons represent TaylorMade’s first real foray into creating technical forged irons that incorporate technologies never before seen in the category. The Precision Weighting Port (PWP) and advanced six-step forging process provides these irons with the most consist-ent and precisely weighted forged irons Tay-lorMade has ever made. To make sure they created forged irons that work for all golfers, they have three unique models – the Tour Preferred MB (Muscle Back), Tour Preferred MC (Muscle Cavity) and Tour Preferred CB

“..we aim to create the best performing golf products in all categories – everything else follows from that.”

(Cavity Back) – each targeted at a slightly different player demographic from the Tour player to a 20 handicapper.

Burner SuperFast 2.0 – “Quick and Easy”The Burner SuperFast 2.0 represents Taylor-Made’s latest creation in the Burner family known for being the fastest and easiest to play metalwoods in our line-up. The Burner SuperFast 2.0 driver features advanced aero-dynamics, oversized face area, low-back-CG and ultra-lightweight components that com-bine to make it incredibly long. These prod-ucts also have the same innovative white col-our crown that the R11 family has.

Penta TP golf ball – “The First 5-Layer Golf Ball”One of TaylorMade’s true product mile-stones. The Penta TP is the first five-layer golf ball on Tour and has taken performance to a new level by optimizing performance for all shots – all the way from the driver shots to chips and putts – in one single golf ball mod-el. TaylorMade has over 100 Tour players us-ing Penta and they already have 19 Tour wins and a Major win with a ball that has now been in the market for just one year. One of the great features of the five-layer design is that golfers of all levels can benefit from the Penta TP as it works equally well for fast and slow swing speeds.

conTacT

Martin Kaymer, “US PGA Championship winner, using the new R11 Driver”

TaylorMade Golf – Tailor-made for You

TAylORMADe-ADiDAS GOlF COnCePT ShOPThe Cathay #02-08 S229233Tel: 67351526email: [email protected]: www.taylormadegolf.asia/sg/

co-PUBLISHED

Tomo Bystedt, Director, Product Marketing & Brand Communication for Asia, TaylorMade-adidas Golf


n the recent elections, we saw the rise of social media as powerful communications platforms, as Facebook, Twitter, YouTube and others were used to discuss election issues in public and

galvanise the public to vote.Businesses in Singapore too should take heed of

how discussions online through social media can influence customers and other stakeholders – who will cast their vote for or against the company through their buying power as well as their influence among friends and associates.

There is one area in particular that is often not looked into enough – the use of social media monitoring for sales opportunities. Here is a story that’s not new but that’s worth retelling. By monitoring Twitter for sales leads, Avaya responded to a tweet by a potential customer in 2009 regarding their new phone system. 13 days later, Avaya closed a USD250,000 sale, and still uses the event as a social media case study today.

The web 2.0 driven explosion in online sources of customer information means that B2B sales lead monitoring at Singapore companies has taken on more possibilities. To take advantage of these it is important to keep in mind some best practices.

First, be clear about the objectives.What is the sales growth strategy? Is the company aiming to increase sales to existing customers by selling more of the same to them or by offering new products? Or is the main priority to win new customers? Are those new customers to be found in existing market segments or new markets such as overseas countries or as yet untapped industry segments?

Answers to these questions will to a large extent determine which companies are to be monitored in social media.

Naturally, the sales strategy may include multiple objectives that contribute to overall growth. In that case, setting the objectives for sales leads monitoring is all about priorities and deciding which sales efforts could benefit most from additional intelligence.

Once objectives have been set, the format, level of detail and frequency of updates on potential sales leads from social media, and how these will be delivered within the sales organization, need to be considered. In many cases, delivery will be to many sales people in different locations around the world.

A regular flow of basic information about new suspects and prospects may be sufficient to help

sales teams in many companies. In others, the sales intelligence may be in a more comprehensive format, including target company profiles with valuable details and updates about its strategy and business challenges. Such intelligence provides an indication of a prospect’s needs, not only its existence.

One powerful solution is to deliver sales lead intelligence into a corporate market intelligence portal where the information can be combined with other intelligence about industry and market trends, and made accessible to sales teams. In such a portal the incoming sales leads can be automatically distributed to the right sales people based on their geographical or sector territory, and team members can add insights by posting comments to the incoming information.

Follow up neededThis type of solution allows seamless integration of the sales lead intelligence with the follow-up action, for example, enabling sales personnel to react to potential customers’ discussions on the web, as in the Avaya case mentioned above. Members of the sales team can engage in an online conversation on social media platforms directly through the same user interface that delivers the intelligence. Caution and tact are required however – some potential customers may not react well to an unexpected and heavy-handed sales approach.

Taking things to another level, more advanced sales lead monitoring might involve continuous analysis of specific target companies on several parameters and provide recommended actions. This can work well in industries where buyer companies are large and the vendor has several solutions to offer to different business units, at different times.

In this kind of sales lead monitoring, the ongoing analytics based on multiple information sources – including social media – will alert sales teams about the company’s emerging strategies or business challenges, and the best propositions for that prospect at that moment.

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education feature

Ceaseless EducationPostgraduate programs in a wage war against mediocrity

Dr. Tan Jing Hee, Executive Director and Chairman of Academic Board, EASB

Man’s search for knowledge and truth never ceases. From Plato’s time to the modern man, the pur-

suit to define the “self” never seems to end. With the competitive need to meet press-ing deadlines, mortgages to pay, careers to advance and time to beat, there is mount-ing pressure to put a stop to this journey for knowledge. We caught up with East Asia Institute of Management (EASB) and Singa-pore Management University (SMU), two of Singapore’s top educational institutions, to explore this issue and attempt to answer the Singapore professionals’ who-am-I and how-much-am-I-worth question.

Human capital is replacing financial capitalIn one of its studies released this year, the World Economic Forum (WE Forum) stat-ed that “Human capital is replacing finan-cial capital as the engine of economic pros-perity.” This takes place in the midst of high unemployment rates, even while economies struggle to remain afloat.

With this premise, the WE Forum pre-dicted that by 2020, skills for high-demand jobs must be developed to be at par with the competition. Educational institutions should therefore upgrade their programs, if not create new ones, to address this future talent crisis. There has already been an in-crease in MBA enrollment in the past few years, as reported by some institutions such as EASB. This is a result of industry de-mands for higher-skilled professionals.

“Our experience is that enrollment into our postgraduate programs, especially the MBA has been experiencing a steady rise over the last 4 years, irrespective of the state of the economy,” said Dr. Tan Jing Hee, EASB’s Execu-tive Director and Chair-man of Academic Board, who sees the financial crisis as a factor in the increased demand for an MBA education. “This seems to indicate that student enrollment in private education in-stitutions at postgraduate level is relatively stable, irrespective of whether it is a time of crisis or of economic growth. Demand may be fueled by the retrenched seeking further education as a form of upgrading to remain competitive. Individuals eager for career progression will do the same during economically good times.” From early 2008 up to 2010, Singapore saw an increase in the postgraduate student population. The increase was steady, from 41.21% masters and university degree graduates in 2008, to 42.84% and 44.1% in 2009 and 2010 respec-tively. Singaporeans seem to be more than willing to invest in quality education if it helps them secure a better future.

Postgraduates versus non-postgraduatesIn Hay Group’s report on fresh graduate salaries last year, salaries of bachelor and masters degree-holders were expected to

decline from the average of S$2,461 and S$2,856 across all industries to S$2,418 to S$2,820 in 2011. However, this is only due to caution on the companies’ part, allowing for the uncertainties of the economy.

“Education, especially at postgraduate levels, is increasingly being viewed as an investment, with good returns. There is evidence that executives with appropriate postgraduate qualifications tend to obtain higher incomes, achieve faster promotion and rise up to more senior corporate levels,” Dr. Tan emphasised.

Global movement“Demand will be highest for well-educated professionals, technicians and managers. All over the globe – in developed, newly indus-trialized, BRIC and developing countries – demand is soaring for these professions,” WE Forum reported. To be competitive in 2020, WE Forum said that graduates in dif-ferent fields must be “technologically liter-ate and acquire transferable, cross-cultural learning skills.” That is why educational in-stitutions and companies send professionals abroad for the acquisition of needed skills in increasing their company’s managerial and professional talents.

“Globalisation is fueling mobility, as more companies expand abroad and peo-ple consider foreign postings as an integral

part of professional de-velopment,” WE Forum added.

In 2008, UNESCO released a report which delineated the challenges that come hand-in-hand with this offshore skill acquisition. With glo-

balisation making it easy for individuals to relocate from one country to the other, it has now become easier to embrace cross-cultural training for skill upgrades.

Reflecting this global movement, pro-grammes offered by companies like the UOB International Managers Program and Flextronics’ Emerging Leaders Programme provide training and resources so that em-ployees can hone their skills and jump-start their careers.

On the other hand, schools like the Sin-gapore Management University (SMU) devise key programs to widen the horizons of students. SMU, for example, launched its eMBA program last September, which is a 13-month program giving eligible can-didates the chance to study at top partner universities in China, India, and the US. The university offers overseas 12-15 weeks internships to enable students to study in countries like China, India and the Middle

“education, is increasinGly

beinG viewed as an investMent, witH

Good returns.”

education Feature


education feature>>

“it Has becoMe necessary to

utilise Modern tools in

adMinisterinG quality

education.”

SMU plans for the global exposure of its students

East. This is part of SMU’s plans of global exposure for its students, through student exchange, internship, summer terms, com-petitions, and overseas community service projects.

The UNESCO report warns that “overseas training, intended to equip students with necessary skills to be used in the service of the country of residence, may at the same time, be a source of Brain Drain, leading to the loss of highly trained talent, especially in many developing countries.”

Brain drain has long been an accepted re-ality which developing nations face, threat-ening to create a numbing effect on the psy-che of its deserted society.

Interestingly enough, a new trend has emerged in recent years. UNESCO reported that while there is movement of talent away from residential countries like Africa, coun-tries like China, India and South Korea are experiencing a phenomenon called Brain Gain.

As a country establishes a stronger knowl-edge base system and the promise of a stable economy emerge, there are signs that post-graduates, especially at doctoral level, are be-ginning to return to their home countries.

education and nationThe WE Forum reports that Brain Gain and other advantages of a highly-skilled labour force have a direct positive impact on the economic status of a country. Quality higher education and training is very essential for economies seeking to move up the value chain.

“In particular, it is imperative for today’s globalising countries to nurture pools of well-educated workers who are able to adapt rapidly to their changing environments and the evolving needs of their economies. The quality of a nation’s education system, as measured by secondary and tertiary enrol-ment rates, its industry relevance as well as the extent of staff training through voca-tional and continuous on-the-job training—often neglected in many economies— are all indicators of the quality and effectiveness of the constant upgrading of workers’ skills.”

Dr. Tan elaborated that “Education as a key agent of change is an effective process of preparing and equipping a country’s human resources for sustained economic develop-ment. This is particularly so for a knowl-edge-based economy, where the availability of skilled manpower at managerial, profes-sional and technical levels is directly corre-lated with a vibrant and growing economy.”

leading education hubSingapore is fast becoming the top destina-tion for further education, attracting stu-

dents from all over the world. Singapore Business Review recently reported in its website a programme offered by a Singa-pore-based company with a great internship opportunity for 30 foreign students, offering a S$10,000 grant to the best intern.

News such as this set the ethos for educa-tional institutions to promote a vibrant envi-ronment for higher learning to Singaporeans and foreign students alike. UNESCO’s study further elaborated that Singapore has been the ideal example of how a supply chain of highly-skilled personnel “who are capable of playing a crucial role in drawing their coun-try to an influential position in knowledge societies and economies” has heightened awareness of the potential benefits of quality education to a nation’s skilled workforce.

There is a noticeable trend of institu-tions tailor-fitting their programs to shifting market demands. “Although some masters’ degrees by research are still extant, many countries have been developing, in response

to labour market pressures, masters’ degrees which are tailored to the needs of particu-lar professions,” WE Forum said.EASB has been leading the way, by identifying and cre-ating industry-relevant pro-grammes. “Our Academic Board consists of industry experts who regularly pro-vide advice and feedback on changing needs in the mar-ketplace.

Our Curriculum Committee reviews our programs and syllabi on a quarterly basis and recommends curriculum update and introduction of new courses. This has re-sulted in the introduction of new disciplines

such as hospitality management, and health science programs in recent years. Two years ago, with the building of integrated resorts, we were among the first to launch a casino management program. In the pipeline are new program such as Medical Bioscience, Physiotherapy etc.”

education and technologyIn this advanced world of technology, it has become necessary to utilise modern tools in administering quality education.

At SMU, there are a number of professors who tap on online collaboration and even social media tools for teaching and learn-ing.

The school also has its SMU Wikis (think Wikipedia) which are accessible to all stu-dents, staff and faculty. They can freely add and edit information. In fact, most of the SMU Wikis can be read by anyone outside the University.Students have found it a useful platform to

collaborate, share and build knowledge. It can be seen that the use of online collabo-

ration tools, social media and IT tools enhances the effectiveness of the student learning experience.

The shifting patterns of national industry and eco-nomic development needs, together with the gathering pace of globalisation, mount challenges which education-al institutions must respond

to in order to satisfy the incessant demands of both local and international corporations. In this context, it becomes apparent how essential postgraduate programs are in this technological age.


CONTACT

CO-PUBLISHED CORPORATE PROFILE

While there is now significant market growth in Singapore particularly and in other Asian markets, it is clear that

the after-effects of the global financial crisis are still shaping the way businesses operate.

There’s no denying that companies in Asia have not only fared better than most during the recent global crisis but have also been the first to show real signs of strong growth. How-ever, results from a new independent study commissioned by Atradius and carried out by CFO Innovation Asia, suggests that the prob-lem of late payment remains a growing prob-lem for Singapore businesses.

The research, which was completed at the end of April 2011, gives a clear indication that companies in Singapore are becoming increas-ingly concerned about the growing trend to-wards delayed payments, with 45% saying that they are now more anxious about late payments than they were before the global crisis.

It appears these concerns are justified as there are also signs that payment delays, in general, are increasing with 75% of Singapore businesses surveyed reporting that payments are made outside the agreed payment terms. Requests for extended payment terms are also escalating, with just under half (49%) saying they had experienced an increase during the past 12 months.

Late payments can penalise your businesses by costing you money to explore and secure other finance streams such as potentially ex-pensive bank finance, loans or other options,

which enable your cash flow to be maintained. Clearly, businesses are adopting different strat-egies to address the late payment issue, but some of the approaches identified in the re-search also raise some cause for concern.

Restricting customer credit could put Asian business at riskWe found that just under half (48%) of Sin-gapore companies are reducing exposure to those customers judged to be less creditwor-thy, compared to the Asian average of 80%.

While, arguably, you may consider this a sound approach, it’s only when you look at the quality of information used to make these de-cisions that questions of its accuracy and reli-ability arise. Poor information can undermine the validity of the original decision.

However, when you combine this result with another finding, which suggests that busi-nesses are insisting on advance payment, then there is a clear danger that by adopting these strategies, companies could limit growth, lose market share and become uncompetitive.

The fact less Singapore companies are re-ducing credit exposure than some of their neighbours could perhaps be linked to them also recording the third highest familiarity with trade credit insurance at 51%, behind Hong Kong and China.

Outside these top three countries, lack of familiarity with trade credit insurance could in-dicate a key reason why some Asian businesses are considering potentially restrictive strategies of up-front payments and imposing tighter

credit granting conditions on customers.

Credit insurance can remove the worry of non-paymentNaturally, payment practices are of specific in-terest to Atradius since we provide credit insur-ance to protect businesses against the risk of non-payment when trading on credit terms. Credit insurance policies may typically cover up to 90% of the value of outstanding receiva-bles, giving a boost to those wanting to secure payment of their accounts receivable on time, and in full.

To illustrate just how widely used credit in-surance is globally and what the scale of our involvement Atradius, with annual revenues in excess of USD 2.2 billion, has been providing trade credit insurance cover for over 85 years across the world and has more than 50 years of buyer underwriting experience in Asia. To-day, it has offices in Singapore, China, Japan, India and Hong Kong with cooperation agree-ments in several other Asian Markets.

Credit insurance is enables you to trade comfortably on credit terms with your custom-ers who have an insurable credit limit in place. This means you can more easily offer credit terms to maintain your competitive edge and to avoid the ‘up-front’ payment burden. Atra-dius stores information files on 60 million com-panies worldwide, so we can help you avoid risk and ensure your credit decisions are based on reliable and robust data.

Businesses will no longer tread on risky lines

Martin Jones, Atradius Country Manager

Payment delays are a growing concern for SG businesses

ATRADIUS CREDIT INSURANCE8 Shenton Way #31-02Singapore 068811Tel: +65 6372 5372Fax: +65 6536 8310Email: [email protected]


Payment delays are a growing concern for SG businesses

MaLaYSian countrY rePort

Tiger’s roar in SingaporeMalaysian business strengths and achievements amidst changes

Mr. Gan Vi King, General Manager of Strategic Planning of The Nomad Group Bhd

Kuala lumpur – one of the hottest tourist destinations in the world, ranked top 5 by Euromonitor In-

ternational as a top city destination in 2009. Singapore likewise received the same accla-mation seizing top 4 of the said list. Join the flaming cultural mixture from Asia’s Tiger country with that of Singapore’s open econ-omy and we have a mishmash of business opportunities uniquely found in Malaysia-Singapore.

Malaysia and sG: image of growthSandwiched between two of Malaysia’s pe-ninsulas, Singapore is inevitable to experi-ence changes in forms of new infrastruc-tures, political shifts and aggressive thrust on tourism development to set the pace for growth. On top of all these, it is only fitting to see Malaysia-Singapore as the next stop to any leisure or business traveler’s itinerary. Both have great support from the govern-ment, conducive political situations, unique tourism programs as well as vast business opportunities.

Opportunities such as these do not go un-noticed, especially to a young up-and-com-ing company dedicated to providing serv-ices to different kinds of business travelers.

From Malaysia to singaporeThe Nomad Group Bhd, first embarked into the hospitality and serviced offices business in 2007. Its two-pronged business portfolio venturing into hospitality comprising hotels

and serviced residences; and serviced offic-es marks its dedication to Malaysia’s boom-ing business and tourism industry. In fact, it is the only integrated player that offers both working and living spaces for the mobile and savvy business travelers.

Situated along the fa-mous “Embassy Row” in Jalan Ampang, Malaysia, the Group’s all suite hotel, The Nomad SuCasa, is a silent retreat from the hectic world of the metropolis. Its real charm lies in their cus-tomer care, something The Nomad prides itself in, and it overflows to other ventures like The Nomad Bangsar Serviced Resi-dences, which offer ample personal space that speaks comfort and refuge.

Situated in the heart of Bangsar, The No-mad Bangsar Serviced Residences is home for those who wish to experience colorful Malaysian life while retreating to a place of security and comfort. Apart from the hotel and serviced residences, The Nomad owns Novotel Kuala Lumpur City Centre, which is managed by the Accor Group while The Nomad’s hotel management arm currently manages Tanjung Bungah Beach Hotel in Penang.

Hotels and residences are testaments to the company’s tribute to the Malaysian hos-pitality, but The Nomad Group has bore in mind not only leisure travelers and local citizens but also the swelling number of the

business class. And the next stop for their ongoing expansion – to no one’s surprise – Singapore.

Prime addresses, prime spotsThe concept is not new. It has been in exist-ence for years, but the virtual office (VO) in-dustry is slowly climbing to a state of steady demand following the evolution of business with the information age. This unique space utilization technique is bordering on tech-nology and real estate management.

Gan Vi King, General Manager of Stra-tegic Planning of The Nomad Group Bhd, explains that on the demand for VOs, “there are now more aspiring businessman and entrepreneurs wanting to venture into their own businesses mainly as a result of improved economic environment.” VOs create an opportunity to save up on other expenses like rent and employment of other personnel that can otherwise be provided by The Nomad Offices.

The Nomad Offices’ main business is providing serviced offices and virtual of-fice. It had its first address in 2007 in Sin-gapore, which now operates as The Nomad Offices, Raffles Place. Since then, the com-pany expanded to other centers in KL, Ja-karta, Bangkok, Manila, and Ho Chi Minh City, locating prime addresses and premier locations with which to house prospective

clients.Gan emphasizes the re-

quirements before setting out on a place. “Basically buildings suitable would be of Grade A buildings with good support facilities including access to public

transportation. Asian countries, in particu-lar, have dynamic and vibrant economies, which attract business travelers from all over.”

VO has enormous growth opportunity due to the convenience it provides. The No-mad Office banks on this. In the future, it plans to establish its presence in other Asian countries like China, Taiwan, and India. “The business world now is all about acces-sibility and technology.

We keep ourselves updated on the global as well as local developments. Apart from this, we also embark on improvements to keep ourselves abreast with the advancing market,” Gan states.

In this borderless world, every one strid-ing to a new location seeks security and comfort, be it a lonely leisure traveler or a smart get-down-to-business entrepreneur, and The Nomad Group is ready to offer a hand anytime the situation calls for it. That’s business opportunity seized at its best.

“tHe virtual oFFice concePt Has Proven to be a PoPular

cHoice.”

MaLaYSian countrY rePort


western food retailers are starting to match local players in size and prod-

ucts, but will their approach win out over the long run or will Asian retail-ers fight back with local service and products ?

The asian food ventureAsia may be the world’s largest con-sumer of food, but it remains an in-significant backwater for the western global brands like Tesco, Wal-Mart and Carrefour who have made only tentative steps into some Asian mar-kets and abandoned others altogeth-er. So what will the future of Asian food retailing look like and who will win out ?

One thing that is clear is that many of the global players are abandoning their efforts in smaller Asian coun-

It has been more misses than hits for western food retailers in Asia

tries where the scale and market opportunities do not justify their time and effort. Back in the 1990s it seemed every major international player wanted a piece of the Asian food business. Carrefour opened its first store in South Korea in 1996 af-ter the government lifted some of its restrictions on foreign retailers and Wal-Mart also opened in the coun-try.

abandoning asiaBut by the end of the 2000s both firms had left the country with their tails between their legs.

Carrefour also sold its Thailand operation and analysts reckon Tesco may have to abandon its Japanese ambitions. But all may not be lost and some of these western firms are try-ing different strategies - and succeed-

ing in different parts of the region. Whilst Carrefour and Walmart were failing in South Korea, Tesco, the UK giant, was quietly succeeding with a different strategy.

Having joined the international race later than its main international competitors, Tesco had some catch-ing up to do; but instead of embark-ing on a series of large acquisitions that could have led to integration clashes, Tesco decided to develop JVs with a local partner, and to gradually assume full control of the company, notes HSBC analyst Jérôme Samuel. “Carrefour took the opposite ap-proach, mainly expanding via by or-ganic growth, and replicating its stan-dard hypermarket format in most of the countries it entered.

It did not achieve the same success, prompting the group to exit some

“Many of the global players are abandoning their efforts in smaller Asian countries.”

Western domination of Asian grocery is by no means guaranteed, reports Krisana Gallezo


retaiL in aSia

countries, especially in Asia (South Korea, Japan and, more recently, Thailand),” he adds.

For Tesco, Asia is now not a ‘nice to have’ market, but a large part of its business, accounting for 16.7% of its 2010 sales, compared to Carrefour on 8.6% of its sales in Asia, Casino at 6.9% and Metro less than 4%. Perhaps surpsisingly, giant Walmart only had 3.9% of its global sales in Asia despite having over 800 stores in China.

HSBC estimates that Walmart’s sales in Asia will be twice the size of Tesco’s in 10 years. Walmart’s 2010 sales of around US$16.2bn in Asia were roughly the same as Tesco’s (GBP10.3bn in 2010).

Strangely, Carrefour already runs 190 stores in China and by 2013 will have more stores in China than in France yet HSBC expects Carrefour to continue to derive about 37% of sales from France but only 7.3% from China.

china syndromeBut while some international players are willing to concede smaller mar-kets there is one market none can af-ford to admit failure in, and that mar-ket is China. And the battle in China is for the hypermarket, which still has lots of room left to grow.

Retail analyst firm Planet Retail projects that with the rapid develop-ment of modern channels, there will be 3,800 super and hyper outlets in China by 2014, compared with 2,600 in 2010 and 1,000 in 2005, whilst the main store format, supermarkets, which accounted for 77% of industry value in 2008, is already saturated.

According to HSBC, by end-2009, hypermarkets and convenience

stores accounted for 21% of total fast-moving consumer goods retail space. Euromonitor estimates that its share will exceed 24% by end-2014. Walmart estimates that there are more than 700 cities in China where it could open stores, up from the 121 cities where it is currently present.

stopping expansions in chinaBut it hasn’t been smooth sailing in China with regulators making life difficult for some of the players. In 2002, Carrefour’s expansion was put on hold after the government claimed its first stores openings had been made without the necessary regulatory approval and stipulated that foreign retailers must have a maximum 65% stake in a company. “This is the primary reason why the main international players entered the country in the 1990s and have pursued aggressive expansion plans there (Carrefour in 1995, Walmart in 1996 and RT mart in 1997).

The foreign players’ strategy has been to build their own supply chain while local chains have mainly fo-cused on expanding a store network locally without building a supply chain and sourcing directly from suppliers.” notes the bank.

HSBC believes this model may af-fect their future expansion and may require them to make substantial in-vestments in order to catch up with foreign players.

Time will tell who has the bet-ter model and who will win the war for the hearts and stomachs of Asia’s hungry consumers.

But the dream of easy pickings in Asia’s growing food markets is turn-ing out to be harder than thought.

asian contribution to sales growth 2004-13e chinese sales density (eur per sqm, 2010)

Source: Company information for historical data and HSBC estimates Source: Company data, HSBC estimates

Korea Briefing from HSBCWe expect the Korean food retail market to grow 4.7% in 2011. After the exit of Carrefour and Walmart, consoli-dation is lagging and Tesco could become market leader by 2013. The top three players in the Korean food re-tailing market are Shinsegae (123 E-Mart hypers), Tesco (118 Homeplus) and Lotte Shopping (86 Lotte Mart) with a cumulative 25.7% market share.

Although the market still offers room for growth, it seems to us that a good share of the consolidation has already happened. Carrefour and Walmart exited the market in 2006, Carrefour by selling its 32 hypermarkets to E-Land and Walmart by selling its 16 hypers to Shinse-gae. In 2008, Tesco bought 32 stores from E-Land and became the number 2 food retailer in Korea.

Carrefour and Walmart exited the market as their sales per sqm were at least 50% lower than Tesco’s, mainly owing to low traffic and poor brand perception. Tesco’s success in Korea has been to build a brand from scratch with a local partner, Samsung, and to progressively take full control of the JV while retaining its local flavour.

Thailand Briefing from HSBCModern retailing growing slowly but surely, with a 43% penetration rate. At its investor presentation in Decem-ber 2009, Casino estimated the worth of the Thai food retail sector at US$17bn.

Since Carrefour sold its Thai assets to Big C in Q4 2010 there are now three major players in Thailand’s large-store formats (hypermarkets, CC): Tesco, Big C (63.2% owned by Casino) and Makro, the cash and carry oper On 15 November 2010 Carrefour announced the disposal of its 34 hypermarkets and 37 shopping malls to Casino for THB35.5bn (EUR868m) – a very high price, implying EV/sales of 120% and EV/EBITDA of 13x. We see strong reasons why Big C was willing to pay such a high price: The acquisition was very strategic for Big C, allowing the No. 2 market player to narrow the gap between itself and Tesco – the market leader.

Along with its 34 hypers, Carrefour owned 37 shopping malls (unlike in France), which are a perfect fit for Big C’s 57 hypers and shopping malls; these contributed about 50% of the Carrefour’s trading profits in Thailand.


inSurance and re-inSurance feature

Future SecuredRewriting Singaporeans’ outlook for financing insurance

Annette King, President & Chief Executive Officer of Manulife Singapore

singapore’s life insurance industry has recently experienced an upturn with a 45% increase in Q1 2011, Life Insur-

ance Association Singapore (LIA) reported. The increase, according to the report, is cred-ited to the strong sales across all products.

LIA reported that the weighted regular premiums sales reached $294 million in Q1 with a 35% growth over the same period of last year.

Further on, as of 31 March 2011, “a total of 2.38 million lives were covered by health insurance with paid up premiums amount-ing to $778 million. However, new business health insurance sales dropped by 13%to $35 million compared to the same quarter of last year. The bulk of this - 86% - went to Integrated Shield Plans and riders,” LIA noted.

The growth of the insurance industry is complemented by the increasing aware-ness of the buying sector to its value. True enough, companies like Manulife and HSBC engage in different programs to educate the public on securing the future with financial planning.

In a developing pragmatic environment, how much value does a Singaporean put into ensuring the future? Doubts confounded the robust market, but the insurance industry continued to thrive, discounting questions about its own gloomy future.

There are two ways by which the future can be ensured. First, by extending insur-ance to others; second, by insuring oneself.

ensuring the future - ManulifeThe average Singaporean has at least three insurance policies, according to a research survey by the LIA. However, the potential for the insurance market remains vast with the LIA reporting that Singaporeans are underin-sured by 75% of their protection needs. Manulife Financial, the leading Canadian-based financial serv-ices group, believes strongly in educating consumers on the importance of insurance as well as helping them identify their priorities with a unique financial planning tool.

“Getting the right financial advice and purchasing the right insurance policy is im-portant. We have been organising financial education seminars to share this with our policyholders,” said Annette King, Presi-dent and CEO of Manulife Singapore. “All our Financial Planners are trained on our unique and trademarked PLAN RIGHT™ system and they are certified to help custom-ers identify their goals and ensure that they make the right choices.”

With PLAN RIGHT™, Manulife Financial Planners take consumers through a series of questions to identify what is important to them before formulating a concrete plan. Manulife also works hand in hand with in-dustry associations to raise awareness. An example of this is by supporting FPAS’ Fi-nancial Planning Day.

She further added that, though many Sin-gaporeans have Medisave, it may not be enough in times of costly or lengthy medi-cal treatments. It is imperative therefore that Singaporeans consider having sufficient health-care insurance to enhance coverage in this area.

Manulife Singapore distributes its prod-ucts through a multiple-channel system with Financial Planners, banks and Financial Advisers Firms. With world-class training modules, Manulife Financial Planners are equipped with relevant knowledge and skills pertinent to guide their customers.

In addition to strengthening their current agency force, the company maintains high standards in all areas of its business. “As a product innovator, we will continue to de-velop new plans that cater for the needs of Singaporeans. We will also provide our Fi-nancial Planners with the best training and support to enable them to serve to their best ability,” said King.

ensuring insuranceThe Company has a long history of prudent reserves for future obligations. “We maintain a capital adequacy ratio with a safety margin that is more than three times of the minimum threshold stipulated by the Monetary Authority of Singapore. Our ability to weather the recent financial storm

serves as an assurance to our customers of our ability to take care of their investments with us,” King said.

She further added that Man-ulife Financial was known for its leading corporate govern-ance practices and rigorous risk management framework ap-

plied in global operations. This ensures that their risk-takings are measured, monitored and managed. “This includes a requirement for every product in every market to meet strict enterprise-wide risk management cri-teria on its own standalone basis.”

Over the next three years, Manulife Sin-gapore’s main focus is to grow from a stable mid-market player to a significant insurer in Singapore, through the growth of its agency and partnership distribution channels. “We are expanding and have just set up an ad-ditional financial advice & customer service centre at Tampines Grande. This is a demon-stration of our commitment to our custom-ers to serve them better,” said King.

“We will continue to innovate and be cus-tomer-centric in terms of our products and services.”

Service is the company’s strength and differentiator. This was confirmed by the Institute of Service Excellence in the 2010

“GettinG tHe riGHt Financial advice is

iMPortant.”

inSurance and re-inSurance Feature


inSurance and re-inSurance feature>>

“Hsbc understands

cHanGes in risKs and MarKet dynaMics.”

Walter de Oude, CEO of HSBC Insurance

Customer Satisfaction Index of Singapore, a survey conducted by the Singapore Manage-ment University.

“Manulife Singapore’s score of 68.5 topped all financial institutions - banks and insurers alike, and also surpassed the national aver-age of 67.2%. Our success can be attributed to our Customer PRIDE values, which drives us to be the best that we can be for our cus-tomers,” King proudly stated. The acronym PRIDE stands for Professionalism, Real value to customers, Integrity, Demonstrated finan-cial strength and Employer of choice.

understanding the market - HsbcHow HSBC protects its policy holders de-pends on how it understands its market. And based on this understanding, it creates a whole new world of products to fit its unique findings.

HSBC adapts to the development in tech-nology, promotes wealth management and has healthy risk management plans, all at the same time protecting the future of its clien-tele. Such is to be expected from a company that dedicates itself to studying the market to tailor-make products for the ever-shifting in-surance needs.

“HSBC initiated a full-scale study in 2007 with focus on three pertinent fronts – Sin-gaporeans’ insurance needs, our customers’ preferences and to get an understanding of how we can better serve our customers in Singapore.

From the study, we learnt that Singapore-ans’ needs are not homogenous and that they valued solutions that gave them more flex-ibility through a modular approach that ena-bles them to tailor their insurance plans to meet their needs and circumstances. Retire-ment financing and the corresponding lack of preparedness of consumers also emerged as a major theme,” said Walter de Oude, CEO of HSBC Insurance.

Centering on this intelligence, HSBC formed solutions such as Flexipay allow-ing customisation of their premium paying period; and Growth Manager, where 100% of premiums are invested in units on top of insurance cover.

HSBC, in one of its findings from the 2009 HSBC Insurance Monitor, claimed that Sin-gaporeans were on the constant lookout for insurance that can provide wealth growth in the financial crisis. This allows Singaporeans to possess a safety net to protect themselves and their families in case of unforeseen fi-nancial breakdown while saving for their fu-ture financial goals.

A need-based solution like HSBC Secure-Income was developed as an offshoot of the study. It is a well-received retirement plan that “provides our customers with hassle free

application with no medical underwriting, flexible income payouts and guaranteed re-ward upon end of the accumulation term,” added de Oude.

As part of HSBC’s programmes for increas-ing market awareness on insurance policies, they initiated programs with insights into the key issues associated with the growing popu-lations and increasing life expectancy.As a leader in the growing retirement serv-ices market, HSBC has come up with HSBC Future of Retirement (FOR) to study global retirement trends, and HSBC Asian Insur-ance Monitor, a comprehensive study on consumer insight research that identifies “customer perception, behaviour, motiva-tions and buying activity related to insurance protection, long-term savings and retirement mindsets,” de Oude enumerated.

“ In the FOR survey, planners are estimat-ed to have nearly twice the retirement savings compared to non-planners and job security and cost of ill health continue to be key fears

amongst Singaporeans when it comes to re-tirement planning. This is why it produces “Foresight,” a newsletter aimed to address the needs identified in FOR.

Positive outlook on public healthcareHSBC maintains that Singa-poreans have great faith in the government’s healthcare system. In the HSBC Asian Insurance Monitor 2010, 35% of Singaporeans reportedly expect to be paying for a mandatory savings scheme for medical insurance coverage, although 29% expect to increase spending on private medical insur-ance. 24% feel that government healthcare will be sufficient to cover these rising costs.

“The findings suggest a reliance on gov-ernment and public health schemes and this could be attributed to the efficiency of the public health system in Singapore,” de Oude stated.

Public health plans, however, according to de Oude “mainly cover medical reim-bursements but will not cover loss of income which can cause great impact on families. This is where private medical plans come in to supplement public health coverage, by providing additional support for long term medical and therapy and life time coverage of critical illness.

HSBC recognizes that there is a concern on the additional cost in taking up private medical plans. But the added benefits can certainly far outweigh such additional costs so HSBC is keen on promoting private insur-ance all the more.

HSBC also protects itself to protect others. In order to manage risks, HSBC understands changes in risks and market dynamics.

de Oude emphasises that a “strong under-writing function within the company that is

able to stay alert and updat-ed towards market trends and adapt its underwriting approaches accordingly is essential for the company to retain the right customers and the right type of risks.”

HSBC’s product design, underwriting policies and reinsurance are the key steps to HSBC’S risk management. Innovative products such as SecureIncome and Guaranteed Saver Plus, with little or no medical underwriting, both simplify the sales and service process for their customers’ benefit but at the same time is designed with sound risk management.

Source: Urban Redevelopment Authority

ProPertY

Top residential transactions

LOCALITY

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DEVELOPER

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PROPERTY TYPE

Non-LandedNon-Landed Non-LandedNon-LandedNon-LandedNon-LandedNon-LandedNon-LandedNon-LandedNon-LandedExec CondoExec Condo

Non-LandedExecCondo

Non-LandedNon-Landed

Strata-Landed /NonLandedNon-LandedNon-LandedNon-LandedNon-LandedNon-LandedNon-LandedNon-LandedNon-LandedNon-LandedNon-LandedNon-LandedNon-LandedNon-LandedExec Condo

Non-LandedNon-LandedNon-LandedNon-LandedNon-LandedNon-LandedNon-LandedNon-LandedNon-Landed

Landed Strata-Landed

Non-LandedNon-LandedNon-LandedNon-LandedNon-LandedNon-LandedNon-LandedNon-LandedNon-LandedNon-LandedNon-LandedNon-LandedNon-LandedNon-LandedNon-LandedNon-LandedNon-LandedNon-LandedNon-LandedNon-Landed

UNITS LAUNCHED

IN THE MONTH

500501

9080639698

06995

00

150000

190

25000000

2700

400000000000

1019

200000

20102045

012

05000000

UNITS SOLD

IN THE MONTH

340224

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99877777777666555

MEDIAN PRICE

($PSF) IN THE MONTH

789889

1313972

232421981339

87818311456

682659

1474709856

251915681049

8771301

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76911251095

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TOTAL NO. OF

UNITS IN PROJECT

654501

90521130360

981145

69120680406115540642

841715

629696

44361104536122393320

44373561

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36473437121301

64280

54616

37119

36408157383

1040154

6472

1129175336

28219103280127

58278289

72

PROJECT NAME

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HoSPitaLitY & traVeL feature

Uniquely SingaporeBanking on the tourism industry boom

President and Chief Executive, Mr Yu Pang Fey of Singapore Turf Club

singapore turf club

singapore seats between the Malaysian and Indonesian peninsulas. Its strate-gic location marked by the hodgep-

odge of cultures lining its terrain makes Sin-gapore a unique feast to the traveller’s taste. According to Singapore Tourism Board’s report, the total number of arrivals amount-ed to 11 million visitors last year. Its YOY change is 20.2%. A good time for tourism-related businesses to flourish.

The words tourism and Singapore call to mind images of Universal Studios, jaw drop-ping casinos and lots and lots of shopping. It’s easier to imagine going to Singapore for those reasons than for anything else, say for instance, horse racing.

Now before those brows extract question-ing looks, consider a simple premise: as the country launches “Uniquely Singapore,” the country’s umbrella tourism program, to drive tourism higher by 2015, anyone who contributes to this collective vision is wel-come, even an unlikely tourist player like the Singapore Turf Club.

uniquely singapore turf club“Singapore Turf Club (STC) offers a unique entertainment experience of horse racing in the tropics that has gained recognition on the international racing stage, and dis-tinguished by distinctly Singaporean char-acteristics, thus contributing to the overall ‘Uniquely Singapore’ experience for tour-ists,” according to STC’s President and Chief

Executive, Mr Yu Pang Fey.Singapore Turf Club has been in existence

for more than 169 years and is currently re-defining the meaning of horse racing not just in Singapore but in the whole of Asia. As Singapore faces head on the changes it undergoes with its current tourism programs like its 2015 thrust for increased arrivals and being the leading convention and exhibition city in Asia, businesses engaged in hospitality and entertainment are raising their heads for more.

Just how can a company that focuses on horse racing be involved in such a hot tour-ism explosion? The answer lies in Singapore Turf Club’s strength: innovation.

STC steps ahead of its competitors by be-ing more than just a racecourse.

“STC offers a high-quality product in the form of races with an excellent reputation of competitiveness, good quality horses, highly-skilled jockeys, strong integrity and a wide range of wagering options to suit different preferences of horse racing fans, all colourfully staged in modern and well-designed racecourse and off-course facili-ties,” adds Mr Yu, who also says that STC continues to be part of Singapore’s future by constantly re-inventing itself.

Recently, with the boom of smart phone users, STC provided iPhone users with a program that allows easy and convenient

viewing of racing information. The same application for Android users is currently underway.

Uniquely Singapore provides venues for businesses like Singapore Turf Club to be creative. For instance, the inflow of tourists to Singapore is best taken advantage of by creating facilities that will cater to different types of people – not just racing fans.

“There are ample possibilities to host guests whether they are on business or lei-sure travel. All locations are open on race days, both Singapore Racecourse and its Off-Course centres,” Mr Yu says. “If planned in advance, corporate guests may book func-tion rooms or corporate boxes to experience live racing with F&B spread. Likewise, hard pressed for time after a long day’s meeting or holidaying, guests can simply hop into an Off-Course locale in downtown area to wind down with racing and wagering op-tions in a conducive environment.”

STC will be upgrading its grandstand and existing off-course locations later this year, elevating anticipation for frequenters. This is in line with its company’s commitment to keeping up with the customers’ experience and expectations.

STC explores potential in increased horse racing enthusiasm not only locally but also abroad. It currently banks on the op-

portunity of raising interest in Singapore through its live broadcasts of races in different countries like Malaysia, Aus-tralia, New Zealand, South Africa and Macau. The broad-cast boasts of an estimated to-tal eyeball base of hundreds of thousands per meeting. Such broadcast programs entice

racing fans to experience the race live, thus increasing visits to Singapore.

With the changing times come chal-lenges. Singapore Turf Club is not imper-vious to this. When asked about it, Mr Yu reveals that “key challenges include strong competition from the two IRs, rising costs of doing business and delivering consistent excellence in service to customers. To meet these challenges, STC constantly strives to improve productivity, to train its staff to maximize the potential and creativity of each individual, to renovate its facilities to meet rising expectations of customers, to provide excellent service to customers and to explore partnership opportunities with the IRs.”

Singapore is a hots pot in Asian tourism, and with the way Singapore Turf Club ex-plores endless boundaries for growth, we can tell how far this player can race against the times.

“tHe answer lies in

sinGaPore turF club’s strenGtH:

innovation.”

HoSPitaLitY & traveL Feature


ending the peg

n hour out of Amsterdam towards the north coast of Milena may not seem the most likely place to look if

you were in search of the future of en-ergy. But here, set amongst the dunes and traditional Dutch country side reminiscent of a Van Gogh painting, sits the Energy Research Centre of the Netherlands, a government fund-ed research lab where cutting edge research into bio fuels is taking place. Jan Willem Erisman, who is the unit manager for Biomass, Coal & Envi-ronmental research explains that he and his team are working on one of the world’s most advanced biomass gassifiers, and the research being done will have important implica-tions for the way the world consumes and uses its energy.

This biomass gassiffier is small and handles just 100 kg of biomass

Going Dutch in the race to lead the new and global Bio-economy

an hour. It is a pilot project that can convert just about any biological waste or side product, such as wood, manure or garden waste, into gas that can then be used to fire up things like heating systems and power plants. This is a vital part of the renewable energy mix, says Erisman, because other renewable sources like wind and solar don’t work when the wind is not blowing or the sun is not shin-ing. “Whether you go for maximum solar or wind there is the chemical side which needs biomass.”

“There is the resource, there is the heat production which comes from biomass, there is also the flexibility in the grid whenever there is no solar or wind when you need the electric-ity,” continued Erisman. “So whatever scenario you choose, there is still a big role for biomass, in energy produc-tion or in chemical production.” But

this small plant is just the beginning, and by the end of this year the ECN will also open a 10-ton/hr-demon-stration plant of its torrefaction tech-nology, converting woody biomass into biofuel for use in co-firing in coal power plants.

Investing on bio-economyAll this investment and research is part of the Netherlands government policy to make the country a leader in the burgeoning bio-economy. Achieving this vision is vital for eco-nomic prosperity, with the chemical and bio-based sector of their econo-my supporting 65,000 jobs and gen-erating €48 billion in revenue and 20% of exports in 2010.

Ms. Renee Bergkamp, Director General of Innovation at the Ministry of Economic Affairs, Agriculture and Innovation explains that the chemis-

“Whether you go for maximum solar or wind there is the chemical side which needs biomass.”

AAndrew Smart heads to the Netherlands to get the inside on the Bio-economy

PET bottles, made from oil based plastics could soon be replaced by bio-bottles


ending the peg

“It’s got barrier properties that are two to six times better than PET, at a price point that is better than PET”

try and bio-based sector has a yearly R&D investment of €1.3 billion, and that the plan is to “work on a sustain-able future as industry has proven that it is able to put that into success-ful business.”

Indeed the government, through its Netherlands Foreign Investment Agency, is actively courting global companies to set up in the Nether-lands for research, technology and business partnerships.

“We guide and assist foreign inves-tors into the Netherlands,” said Bas Pulles, Commissioner, NFIA. “We support in different ways, from fact finding trips, information, match making with government authorities, introductions in the tax authorities, and all types of technology match-making.”

The government has also allo-cated €1.5 billion of public fund to help drive and invest in bio and green businesses. On a tour of several cutting-edge Netherlands based bio-companies, our correspondent met several companies doing very inter-esting work.

Bio-bottlesOnce such company, Avantium, is a specialist in advanced catalyst and formulation R&D and has developed a process to produce green building blocks, called YXY, from biomass for use in fuels and materials. “Cur-rent PET bottles contain oil-derived components,” said Frank Roerink, CFO, Avantium. “We now have a component called FDCA which is completely 100% bio-based, sustain-able and, with that one, you have also a 100% bio-based, 100% recyclable PEF bottle. It’s got barrier properties that are two to six times better than PET, at a price point that is better than PET.”

Avantium has just closed a €30 million investment round to build its first plant and it is in negotiation with several brand owners to transfer their production from PET bottles to PEF. Another company in the bio-packaging space is Purac, a company that makes a variety of bio-based plastics for things such as drinking cups, plates, knives forks and packag-ing materials.

Venturing into bio and green busi-nessesThey have recently developed a gyp-

sum free process for Lactic Acid that improves the CO2 footprint of Polylactic Acid (PLA), a significant growth market which they expect to expand over the next decade by 10 times to 3 million tons. “We are cur-rently building our first Lactide plant in Thailand and it should be ready by the end of this year,” said Professor Luuk van der Wielen, Director, BE-Basic.

To develop this market, Purac will cooperate with textile giant Indora-ma to develop PLA fibers, beginning with a 10,000 ton first year produc-tion run and expanding to 100,000 tons after developing application specific grades.

In the bio-fuels space, a promis-ing new fuel, known as Pyrolysis oil is showing promise. It is a clean and uniform liquid that can be produced from a wide variety of biomass feed-stock including wood chips, rice husk, bagasse, sludge, energy crops, chicken manure and palm-oil resi-dues.

BTG-BTL is a leading technology supplier for fast pyrolysis plants, with its current focus on replacing fuel oils and natural gas in industrial boiler applications ranging from 1 MW to 20 MW.

Malaysia first in AsiaBTG’s first commercial pyrolysis plant was built for a customer in Malaysia, with the production ca-pacity of 2 ton/hr. On a larger scale, BioMCN operates the world’s larg-est second-generation bio-fuel plant, with an annual production capacity

of 250 million liters. Through an innovative and patent-

ed process, BioMCN coverts crude glycerine, a residue from processing vegetable oils, into bio-methanol, which can be blended with petrol or used as feedstock for other environ-mentally friendly fuels. Using BioM-CN’s bio-methanol in normal cars requires only a few minor and results in a significant CO2 emission reduc-tion of over 70% when compared to gasoline.

“What’s important is that the prod-uct is there right now,” said Rob Von-cken, CEO, BioMCN, “and that bio-methanol has exactly the same spec as methanol, which is very important in terms of transition with your cus-tomers.”

Potato HeadThe use of 250 million liters of bio-methanol would result in an annual reduction of 300,000 tons of CO2 emissions; the equivalent of the com-bined annual emission of 50,000 cars. Other companies visited on our tour included the Aviko Potato Process-ing Plant in Steenderen, which dis-charges wastewater containing pro-teins, starch and phosphate equal to a population of 160,000.

This wastewater is treated at a plant where the organic components are converted using UASB technology into 10,000 cubic meters of biogas at day.

The biogas then fuels an electric plant that generates 630Kw/hr for Aviko, which is 40% of the plant’s en-ergy requirement.

FeAtURe

Renee Bergkamp

Bas Pulles

Andrew Smart


The bio gassifier in Milena

Tricks of the ‘commercial jungle’government official seeking to help that fashionable cause, Small and Medium Enterprises, is like Dr. Jonson’s woman preaching/dog walking on its hind legs. One is surprised to see it done at all; one does not expect

to see it done well. Because the obstinate fact is that most of Hong Kong’s top people have no idea what it is like to run a small and precarious business.

This description is chosen with some care. All small businesses are precarious. My parents were supported for many years by a small enterprise which eventually grew into a medium one. My father was a cheerful soul who rarely shared his worries. But his approach to business was dominated by wariness. His fragile boat could be swamped by the smallest wave, so he was constantly scanning the horizon.

Big business people would have you believe that their world is just as exciting and dangerous. It isn’t. Of course, changes in circumstances can still be an inconvenience, even a threat. But large organisations have a momentum which keeps them going. Also they are valued clients for people like bankers, accountants and lawyers who will eagerly help you to deal with a new problem. When your company gets big enough, you can, with the assistance of said bankers etc., pass much of the risk in your business on to strangers who are gulled into buying its shares. When you get even bigger your continued existence may become a matter of importance and concern to the government, which will dip into its bottomless moneypit to rescue you from the consequences of your own folly.

If you are just running a corner shop, on the other hand, few other people are interested. The fall of a commercial sparrow may not go unnoticed by God, and may be lamented by a few faithful customers. All you will get from the upper reaches of the administration, though, is a small lecture on the essential merits of “creative destruction”.

It follows from this that efforts to help SMEs by offering cheap loans or technical innovations are not really getting to the heart of the matter. New technology may be helpful. Shortage of capital is a common problem. But I believe most small business people would forgo such kind offers in favour of a credible assurance that the government would think carefully before meddling with things which may mean life or death to them.

What is the government doing?Governments must, of course, change things from time to time. Legislators must legislate. What we do not have to live with is ill-planned changes whose finer points have not been thought out in advance.

Recently the relevant department released a report on the great Plastic Bag Ban. This was supposed to discourage us from accepting plastic bags with our shopping by requiring supermarkets to charge for them. Great things were promised: plastic bags would become less numerous, government

tim hamlettFormer Editor of Sunday Standard and Associate Professor of Journalism

A

I will survive!

landfills would fill less quickly, and the planet would be healthier. It now transpires that none of these things took place. The reduction in plastic bag numbers was much smaller than predicted. As far as the planet and the landfills were concerned it was off-set by the appearance of reusable plastic bags which are necessarily much heavier and less biodegradable than the old disposable model. The scheme, in short, has not done what it was supposed to do at all. The rational thing to do at this point would be to cancel it and start again.

But that is not going to happen. Discussions are now in progress on how it can be spread from supermarkets to the rest of the retail scene. The unrepentant originator of the idea wants a bare minimum of exemptions. This is going on despite the clear demonstration provided already that officials grossly over-estimate their ability to predict what the consequences of this kind of regulation may be. I don’t suppose anyone will go bankrupt as a result of any plastic bag regulations. But it is disconcerting to see such unambiguous evidence that the people fiddling with the economic controls have no idea what they are doing.

Then there is the minimum wage legislation. Many people in business are warmly in favour of this, as I am. In fiercely competitive trades it is better if the fierce competition does not turn into a contest to see who can pay the lowest wages. On the other hand, it is difficult to defend the hapless way in which the scheme was introduced. The points which have to be settled in the introduction of such a scheme are widely known and can easily be found out by those who have missed them. The government spends untold sums sending officials and politicos on “fact-finding trips” every year.

Bearing down on us is the proposed law on uncompetitive behaviour. This is another desirable innovation which is in danger of getting a bad name because someone has been skimping his homework. It should not be beyond the wit of man to produce a scheme for Hong Kong with tried and tested features which can be shown to work elsewhere.

No doubt some of the queries raised have been bogus - attempts to muddy the waters by people who do not like the whole idea. The notion that the competition law might in some way impact small businesses seemed a stretch to me, and moreover seemed to be popular with people whose own enterprises were neither small nor medium, but large.

Actually this particular innovation will probably not affect small enterprises at all. But you can understand the

apprehension. As we noted at the beginning - for a small animal in the commercial jungle, wariness is a condition of survival. Still, there are enough hazards there to make it quite unnecessary for the government

to add further ones by launching half-baked schemes whose unintended consequences will surprise their own authors. Small business people do not want help: the role appeals to the self-reliant. They do want to be left alone.

Tim hamleTT


hOng KOng VieW

Simon: The Innovation and Mobile Banking Award – If there is one fundamental reason that led ANZ to winning this award and thereby trumping your competitors, what would this be?Felimy: I would have to say there are many elements to it, but probably one is having a customer-centric focus.This was something that you know we are really looking at bringing to a new level in terms of the design of the particular product. I would say an addition, a degree of rigor around on how we execute it. There are lots of products out there and if you think back to the cars in the 1980s – beauti-ful design but poorly executed, it falls apart, and it costs you a lot to run.

Execution is very important as well. So it’s customer-centric design and then a lot of focus on rigorous execution.

how aNZ innovates ANZ’s head of innovation Felimy Greene was interviewed by Simon Hyett on innovation and other bank initiatives.

Simon: Let’s talk about a customer-centric approach. What would be the leading element that will sepa-rate you from your competitors in terms of having such a customer-centric approach? What differenti-ates you?Felimy: I think everyone under-stands, the customer’s view is very important.

Large organizations whether it’s a bank, it’s hard to actually do that. We put a lot of thought into it. Apart from using our own experiences – whether this will be a product I would like to use as an individual – we also solicit a lot of feedback from customers.

We’ve done a lot of research. We’ve observed people using our products with video cameras… And it’s bring-ing all those elements together into a design... and that we ask ourselves “Is this the product that I would use. Is

this the product that addresses what the customer wants.” And we are guided by a couple of simple mantras, which are part of our bank promise: To make banking simpler.

To make it more people-shaped. And while they are very simple state-ments, if you keep on repeating them, and ask yourself in every stage of the design and execution, “Is this re-ally simple? Is there any other way I can make it simpler? And is it really people-shaped? As opposed to being bank-shaped? Because we’ve a history in the industry of doing it our way instead of the customer’s way. And I think those two things as well are very important.

I assume that treating yourselves as customers, because of course, you’re banking customers as well as bank-ing professionals, helps in reaching that end.

I think it does. Yeah yeah. We got to eat what we grow. And I think it’s fair to say we’re reasonably enthusi-astic. If not fanatic about what we’ve done with the money and we’re very pleased with the feedback. And what we’ve gotten from the customers.

“Treating your-selves as cus-tomers, ‘cause of course you’re banking customers as well as bank-ing profession-als, helps in reaching that end.”


FeAtURe


That’s another piece, this is, listen-ing to the customers. And listening to their feedback and incorporate that into our plans as we go forward. Doesn’t stop here.

Simon: Particularly focusing on mobile banking, why do you think ANZ is such a leader in the particu-lar field?Felimy: I think it links back to the first question, customer-centricity. But then, it’s a little bit more than that. We’ve set a process which is on one hand creative, you know, observing customers. Looking at the softer is-sues around.

How people want to use their mon-ey on a day-to-day basis. And couple that with rigor in terms of the process. We design results and basis. Test our concepts on customers.

Test them on ourselves. And we’ve got some pretty hard requirements before we go to the next stage and ultimately deliver something to the market. I think it’s a combination of a creative process, kind of like art, and a rigorous process, which is more sci-ence.

Simon: A mix of art and science. If you could name one differentia-tor between ANZ’s Go Money and your competitors’, your equivalent competitors’ products, or your near competitors’ products, what would that chief differentiator be?Felimy: I think apart from the com-ments already made around how we design and so on, I think there are clear differentiators right now. One is that this is a custom-built applica-tion from the ground up. There are a lot of banks, not just our competitors around the world, will take the initial banking platforms and repurpose those pages for mobile device.

And it works. But it doesn’t work as well as if you built something from scratch. We’ve built ours from scratch and it talks directly to our core bank-ing systems and provides a very in-tuitive response that you’re not in a browser.

We can maximize the capabilities of this particular device. In case the iPhone for touching and rotating and so on. So I guess that’s the first differ-entiator.

It also makes different in terms of performance and speeds as well because you’re not loading a lot of

graphics over the wireless connection, it’s all local on the phone. That’s one I think the second is very simple but powerful, the notion of getting into your banking on your mobile device which is a four-digit pin. This is an old metaphor. We’ve been using ATM for decades.

You put the card in and you put the four-digit pin. And in this case, your iPhone, your phone, which is now a registered device we know the num-ber of your phone, and once you’ve gone to the registration process, there has to be a four-digit pin to get in. That means that you don’t have to type in your user name, means that you can bank with one hand, with Go Money.

Versus two on other products be-cause you gotta type. With Go Mon-ey, you just type your pin with your thumb and your in. I think that’s quite significant.

Thirdly, we want to do something that was really people-shaped. We got to de-personalise their accounts. We’ve done that by taking the photo-graphic capabilities on your phone, it enabled people to pick photos either from the stock photos we provide, or maybe a family photo, or a house, maybe something of an aspiration. Maybe a savings account for a nice house or a car.

Take a photograph for it, and attach

it to that account and see that when you’re going to accounts on your phone. That’s a nice touch.

I think lastly, enabling people to spend money in simple ways. We’ve been putting money on the feature, so anyone in the country, whether they bank with ANZ or not. It’s very powerful.

You can literally send someone. All you need is their mobile phone. It will enable them to collect securely.

It’s a hard line to walk where like many bank were very careful and cau-tious about anything that might com-promise the security of our customers’ accounts. There are a number of many factors that we’ve employed to ensure the security of the client’s access.

One is that the phone is a registered device; they pre-register with us.

So when they first register, they have to provide more information, more credentials and when the phone was stolen, they can just ring our call cen-tral and we’ll disable it immediately.

Secondly, we store no sensitive data on the phone, so even if it was stolen, there’s no risk there. It’s a fine line.

If you go too far, if you make it too hard, then either the customer won’t use it or worse, they’ll start writing password and things down and that compromises the whole approach to security, so we think we got the right mix here.

“We design results and basis. Test our concepts on customers. Test them on ourselves.”

Felimy Greene, Head of Innovation Pipeline, ANZ BANK

FeAtURe

48 HONG KONG BUSINESS | APRIL 201148 SINGAPORE BUSINESS REVIEW | JULY 2011

LiFe & StYLe

SG’s Best Cigar LoungesBar and Billiard Room Raffles Hotel, 1 Beach RoadThe Bar and Billiard Room is a glamorous, old fashioned starlet of a bar. Composed of four separate areas – a cigar divan, garden terrace, martini bar and billiard room – the cigar divan is decorated with rich gold and red sofas. Serving a range of cognacs, single malts, Cuban cigars, port and sherries, this is one of the best places to kick back and relax in classic and old world surroundings.

Mezza9Grand Hyatt Hotel, 10 Scotts RoadThe modernist floor-to-ceiling glass cage is one of the standout features of Mezza9 in Grand Hyatt Hotel Singapore. Enjoy a range of cigars against the backdrop of the city lights accom-panied by one of their signature martinis, which can be matched with your cigar for a sumptuous sensory experience.

The Olde Cuban2 Trengganu StreetHidden away in Chinatown, this tobacconist specialises in Havanas from Cuba. Transform-ing what used to be an opium den for traders in the 1800s into a store and lounge, and boasting Singapore’s largest walk-in humidor, The Olde Cuban’s rich and luxurious gentleman’s club atmosphere will make you feel right at home. The lounge is decorated with comfy leather sofas, dark wood panelling and, of course, a rather good bar serving single malt whiskeys and refined beverages from around the world.

Cohiba Cigar DivanShop G6, East Lobby, Mandarin Oriental Hotel, 5 Connaught Road, Hong KongThis luxurious boutique is a cigar connoisseur’s dream. Located in the quintessentially Hong Kong landmark, the Mandarin Oriental, it’s an ode to great taste and classic design. There’s a tasting room and fantastic selection of vintage, special, regional and limited edition cigars. This is definitely one to remember if you’re in Central for business.

Recommended by QUINTESSENTIALLY, the world’s leading luxury lifestyle group with a 24-hour global concierge service. Contact [email protected].

Though indoor smoking has been banned in Singapore, there are still places where you can purchase fine cigars, store your collection, relax in a lounge area and sample your favourites in a tasting room.

Gentleman’s club

SINGAPORE BUSINESS REVIEW | JANUARY 2011 49

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THE REAL VALUE OF THE


Twenty-five years ago, the Gang of Four, led by Mao Zedong’s wife Jiang Qing, was at the centre of China’s political and economic life. The Gang’s downfall, in October 1976, led to dancing in the streets of Beijing.

In 2011, it’s the “rule of four” that preoccupies many of China’s ruling economic and political elite, and its elements could not be further from Qing’s puritan values, although its application has profound implications for the luxury goods companies who are currently fighting for a share of China’s consumer boom.

The rule of four was originally defined by Sinclair Lu, president of the Shanghai-based Hurun Report and author of ‘The Rich List’, which identifies the ranks of China’s super wealthy. “The super-wealthy have four cars, four watches and four houses,” he says. “The interesting question is why they buy in groups of four.”

The four houses picture is a good place to find an explanation. Shanghai’s super-wealthy require an apartment in the city, a home in the countryside near Beijing, a villa in Sanya and a flat in Hong Kong, “which is where they buy all their watches,” says Lu.

The villa in Sanya is vital, say experts on China’s new aristocracy: entrepreneurs in their mid-40s who have a net worth of at least CNY 100 million.

“It would mean a terrible loss of

face for a member of the super rich to stay in Shanghai or Beijing during August. They must get out of the city or hide,” says Sam Wong of Javelinwoods, a company that creates restaurants for wealthy diners. “For the same reason, we train waiters to read out the total amount of the bill in a loud voice so other diners will know their host has been generous enough to keep face.”

The purchase of four cars follows a similar

current of upward social mobility. A member of the new aristocracy must have a Rolls Royce or a Bentley, but to drive it all the time suggests the owner had to scrimp to buy it and would result in loss of face. Thus the ‘hanistocrat’, as the super rich of China’s dominant Han ethnic group have been dubbed, must also have a Mercedes S-Class or similar for the chauffeur to drive, a large SUV such as a BMW X5 for his wife and at least an entry level Porsche or Ferrari.

“The rule of four is becoming a fundamental aspect of super rich behaviour in China,” says Daniel Jeffreys, Editor-in-Chief of Quintessentially Asia magazine, who coined the term hanistocrat during a recent study of spending habits in Shanghai. “The principle of “face” plays a vital role in hanistocratic spending patterns and luxury brands are beginning to sense this and changing their marketing plans in response.”

One key supplier to the hanistocrats is Ivan Tong, the Hong Kong-born entrepreneur who launched Sparkle Roll, the company that sells more Rolls Royces and Bentleys than any other in the world – all in China – and is now beginning to build shopping centres to use as laboratories for its “cluster” theory of spending by the super rich.

“Tong believes that if you can sell a hanistocrat a Rolls Royce, you can sell him a Parmigiani watch or a Cartier necklace for his wife,” says Jeffreys. “So instead of marketing individual brands, Tong’s company identifies the emerging wealthy and sells them everything it can on a

pre-determined check list that includes watches and cars.”

The gang of four’s influence lasted only a few months after the death of Mao but the rule of four is likely to last for much longer. As more Chinese entrepreneurs become or aspire to join the new aristocrats, the category of

luxury goods that must be bought in groups of four is bound to grow.

Owning just one of anything suddenly feels so last year.

lasT word

“The rule of four is becoming a fundamental aspect of super rich behaviour in China.”

emma sherrard maTThew

What you need to know about the ‘Hanistocracts‘ and the rule of fours

Emma Sherrard Matthew is the CEO of Quintessentially, the world’s leading luxury lifestyle group with a global concierge

service. For more information visit www.quintessentially.com, call +852 2540 8595 or [email protected].

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